Faurecia to take 60% of Hella and focus on electric, automation and vehicle-interior design
18 August 2021
Automotive lighting and electronics specialist Hella is to sell a 60% stake in its business to Faurecia.
The firms aim to grow in the fields of electric mobility, automated driving and vehicle-interior design. These are areas where the automotive industry is expanding as carmakers push for new technological advances in the face of changing regulations. Suppliers are at risk of being left behind if they fail to adapt at the same pace.
As a combined business, they will become the seventh-largest global automotive supplier and open up ‘significant potential for further profitable growth.’ The deal, which is expected to complete next year, will allow each supplier to use existing strengths to expand their overall market position. The remaining 40% of Hella stock will go under a voluntary public tender offer.
‘Faurecia and Hella are a very good fit. This especially applies to the product range and market coverage. In addition, both partners place a high value on consequent customer orientation, operative excellence, and technology leadership,’ said Hella CEO Dr Rolf Breidenbach. ‘Therefore, it is only logical that we join forces to drive the future of mobility together. With Faurecia at our side, we will have even more opportunities to do so than before.’
Hella and Faurecia have a broad customer base, both through OEM and aftermarket channels. The acquisition will give Hella access to original-equipment (OE) manufacturers in China, Japan and the US. Further opportunities arise primarily in the areas of electric mobility, automated driving, the cockpit of the future, and lifecycle-value management (including aftermarket and special applications). The two companies have complementary business activities, which together offer a high-performance portfolio with broad market access.
The transaction will, for example, create a global supplier for electric mobility with a vast range of services. The combined group will develop a comprehensive offer for hybrids, electrically-chargeable vehicles (EVs) and hydrogen fuel-cell vehicles (FCEVs). It will build on Hella’s energy-management portfolio, sensors and actuators related to battery-electric vehicles (BEVs), as well as Faurecia’s hydrogen-system solutions for FCEV, and hybrid systems.
This is particularly important as the automotive industry transitions away from internal-combustion engine (ICE) vehicles and into electrification of the market. With European markets banning all but zero-emission vehicles from 2035, and other major global markets likely to implement their own bans, automotive suppliers need to have a dedicated strategy for EV component development or risk being left behind. Therefore, it is likely that more companies in this field will look to collaborations or acquisitions in the coming years.
However, the combination of Hella and Faurecia allows for the development of not just EV components, but those for FCEVs too. This is a market that will grow through the logistics sector, with further applications in passenger cars as time goes on.
For the automated driving market, the combination will also create a global technology leader with an extensive range of products and systems. Radars, electric power steering (including fail operational), e-mirrors, 360° views and automated-parking solutions are a few examples of the combined product and system offer. With sales of €3.7 billion in electronics and software, the new group will operate 24 production sites and 21 research and development centres. The group aims to grow to around €7 billion worth of sales in 2025.
When it comes to vehicle-interior lighting, the two companies have been collaborating on innovative new systems since 2018. However, the new company structure can now enhance these efforts, with Faurecia bringing in its expertise in seating and interiors, combined with Hella’s interior lighting, electronics, and sensor knowledge.
‘This combination is a unique opportunity to create a global leader in automotive technologies. I am convinced that Faurecia and Hella have an outstanding fit as we share a common vision, values and culture,’ said Patrick Koller, CEO of Faurecia. ‘Our two talented teams have been cooperating very efficiently since the end of 2018. They have demonstrated their combined capabilities. Together, we will have the critical edge to benefit from the strategic drivers that are transforming the automotive industry.’
To fully leverage the potential of the two companies, Hella’s focus areas are to be integrated in the Faurecia Group while retaining a high degree of operative responsibility. The agreement also allows for the continuation of Hella’s multi-pillar business strategy and consistent investments in the development of future automotive technologies. The established cooperation network of Hella, consisting of numerous joint ventures and strategic partnerships, will also be further strengthened.
This will allow Hella to continue developing new technologies while not affecting existing cooperative work with other suppliers and aftermarket businesses. There will be a degree of monitoring from committees with equal representation across the two companies. Still, Hella will be able to continue with its research, which will ultimately benefit the Faurecia Group.