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Automotive Industry Insight
September 2018
Automotive Industry Insight | September 2018 U.S. Automotive Industry – M&A Update Automotive categories continue to perform in line with the S&P 500 index For 2018 YTD, strategic buyers accounted for 83% of Automotive M&A transactions. During 2017, strategic buyers accounted for 89% of the transactions.
Select Recent Notable Publicly Announced M&A Transactions
Transaction Date Status Target Buyer Size 8/6/2018
Jul-2018 Announced $1.0 billion
May-2018 Announced $271 million
Apr-2018 Announced $5.4 billion
Mar-2018 Announced $3.0 billion
Oct-2017 Closed $250 million
www.peakstone.com 1 Automotive Industry Insight | September 2018 U.S. Automotive Industry – M&A Market Overview U.S. Automotive transaction activity has been strong
U.S. Number of Transactions by Buyer Type U.S. Transaction Multiples
12.3x
22 14 11 15 10 8.9x 8.9x
7 7.5x 7.2x 6.9x 6.9x
8 78 73 71 66 62 59
38 1.6x 0.9x 0.8x 0.8x 0.7x 0.7x 0.6x
2012 2013 2014 2015 2016 2017 2018 YTD 2012 2013 2014 2015 2016 2017 2018 YTD
Strategic Financial EV / EBITDA EV / Revenue
Source: Capital IQ, data as of August, 2018. www.peakstone.com 2 Automotive Industry Insight | September 2018 Peakstone Automotive Index – Trading Statistics Automotive categories performed in line with the S&P 500 Relative Stock Performance
200%
150%
Aftermarket Suppliers: 76% S&P 500: 68% 100% International OEM Suppliers: 68% Dealers and Service Providers: 43% Aftermarket Retailers and Distributors: 20% 50% Domestic OEM Suppliers: 10% Automotive Manufacturers: -31%
0%
Peakstone Index Company details on pages 5-7
-50%
Source: Capital IQ, data as of August, 2018. Note: Peakstone Indexes are equally weighted. www.peakstone.com 3 Automotive Industry Insight | September 2018 Peakstone Automotive Index – Trading Statistics Automotive categories performed in line with the S&P 500 Comparable Valuation Trends – Enterprise Value / EBITDA
16.0x
14.0x
S&P 500: 12.9x 12.0x Aftermarket Retailers and Distributors: 12.0x Dealers and Service Providers: 11.5x 10.0x Aftermarket Suppliers: 8.6x Automotive Manufacturers: 7.1x 8.0x International OEM Suppliers: 7.0x Domestic OEM Suppliers: 6.3x 6.0x
4.0x
2.0x Peakstone Index Company details on pages 5-7
0.0x
Source: Capital IQ, data as of August, 2018. Note: Peakstone Indexes are equally weighted. www.peakstone.com 4 Automotive Industry Insight | September 2018 Public Trading Comparables by Sector
Select Automotive Public Trading Comparables
($ in millions) Market Enterprise Enterprise Value / Forward Gross EBITDA Company Name Cap Value Revenue EBITDA EBIT P/E Ratio Margin % Margin %
Automotive Manufacturers Toyota Motor Corporation $184,285 $322,670 1.2x 7.6x 12.1x 8.9x 19% 14% Volkswagen Aktiengesellschaft $83,712 $245,197 0.9x 7.6x 11.9x 5.4x 18% 10% Daimler AG $72,175 $208,025 1.1x 10.2x 13.7x 6.5x 20% 10% Ford Motor Company $40,017 $167,876 1.1x 11.4x 26.4x 7.2x 10% 9% Bayerische Motoren Werke Aktiengesellschaft $62,238 $160,081 1.4x 10.1x 13.7x 7.2x 18% 13% General Motors Company $53,233 $136,959 0.9x 6.2x 13.5x 6.4x 12% 14% Nissan Motor Co., Ltd. $36,919 $99,344 0.9x 9.7x 14.9x 7.5x 18% 8% Honda Motor Co., Ltd. $53,726 $99,764 0.7x 6.6x 9.5x 7.9x 22% 9% Hyundai Motor Company $22,212 $87,126 1.0x 13.1x 25.5x 6.6x 0% 0% Tesla, Inc. $59,117 $69,858 5.1x NM NM 225.8x 14% -3% Fiat Chrysler Automobiles N.V. $26,271 $29,431 0.2x 2.2x 3.5x 4.5x 15% 10% Peugeot S.A. $25,113 $18,904 0.2x 2.3x 3.2x 6.7x 18% 9% AUDI AG $37,209 $16,645 0.2x 1.7x 2.4x 0.0x 16% 13% Kia Motors Corporation $11,255 $9,789 0.2x 4.5x 20.1x 6.5x 16% 5% Mazda Motor Corporation $7,570 $7,030 0.2x 3.0x 4.5x 7.8x 23% 6% Automotive Manufacturers Median $40,017 $99,344 0.9x 7.1x 12.8x 6.7x 18% 9% 0 Aftermarket Suppliers The Goodyear Tire & Rubber Company $5,838 $11,417 0.7x 5.7x 9.4x 7.6x 23% 13% Snap-on Incorporated $9,500 $10,479 2.6x 10.1x 11.0x 13.7x 51% 25% Allison Transmission Holdings, Inc. $6,067 $8,493 3.3x 8.5x 10.3x 8.4x 51% 39% Meritor, Inc. $1,897 $2,606 0.6x 5.6x 6.9x 6.7x 16% 11% Fox Factory Holding Corp. $2,324 $2,382 4.5x 26.3x 30.4x 27.6x 33% 17% Dorman Products, Inc. $2,422 $2,347 2.6x 11.9x 13.6x 16.7x 40% 22% Cooper Tire & Rubber Company $1,408 $1,596 0.6x 4.5x 7.5x 13.8x 16% 13% Standard Motor Products, Inc. $1,070 $1,145 1.1x 8.7x 10.6x 15.2x 29% 12% Aftermarket Suppliers Median $2,373 $2,494 1.8x 8.6x 10.4x 13.8x 31% 15%
Source: Capital IQ, data as of August, 2018. www.peakstone.com 5 Automotive Industry Insight | September 2018 Public Trading Comparables by Sector (continued)
Select Automotive Public Trading Comparables
($ in millions) Market Enterprise Enterprise Value / Forward Gross EBITDA Company Name Cap Value Revenue EBITDA EBIT P/E Ratio Margin % Margin %
Domestic OEM Suppliers Danaher Corporation $70,934 $81,363 4.2x 17.0x 23.3x 21.7x 56% 25% Johnson Controls International plc $35,092 $48,032 1.5x 9.4x 11.9x 12.7x 30% 16% Aptiv PLC $26,063 $29,417 2.1x 13.2x 18.0x 17.4x 20% 16% Magna International Inc. $20,524 $23,859 0.6x 5.3x 7.6x 8.3x 14% 10% Lear Corporation $11,710 $12,633 0.6x 5.5x 6.8x 9.0x 12% 11% BorgWarner Inc. $9,464 $11,369 1.1x 6.3x 8.3x 9.7x 22% 17% Gentex Corporation $6,212 $5,767 3.2x 9.3x 11.1x 13.1x 38% 34% American Axle & Manufacturing Holdings, Inc. $1,901 $5,456 0.8x 4.5x 7.1x 4.5x 18% 17% Linamar Corporation $2,917 $4,582 0.9x 5.6x 8.1x 5.8x 16% 16% Tenneco Inc. $2,325 $3,631 0.4x 4.2x 5.6x 6.2x 16% 9% Visteon Corporation $3,448 $3,401 1.1x 11.6x 16.0x 17.7x 14% 9% Cooper-Standard Holdings Inc. $2,543 $2,890 0.8x 6.3x 9.3x 11.8x 18% 12% Gentherm Incorporated $1,679 $1,727 1.7x 13.2x 21.2x 18.7x 30% 13% Martinrea International Inc. $907 $1,367 0.5x 4.3x 6.9x 5.9x 18% 11% Metaldyne Performance Group Inc. $0 $0 0.0x 0.0x 0.0x 0.0x 17% 15% Domestic OEM Suppliers Median $3,448 $5,456 0.9x 6.3x 8.3x 9.7x 18% 15% 0 International OEM Suppliers Continental Aktiengesellschaft $42,792 $46,435 0.9x 7.0x 11.0x 10.7x 26% 13% Valeo SA $11,144 $14,748 0.7x 5.9x 8.9x 9.3x 19% 11% Autoliv, Inc. $8,609 $10,398 1.0x 8.0x 11.9x 11.7x 20% 12% Faurecia S.A. $8,607 $9,573 0.4x 4.9x 6.6x 9.5x 11% 8% Compagnie Plastic Omnium SA $5,979 $7,306 0.9x 7.5x 10.0x 10.9x 17% 12% CIE Automotive, S.A. $3,798 $5,540 1.3x 8.3x 11.3x 12.3x 40% 15% Brembo S.p.A. $4,413 $4,752 1.6x 8.7x 12.0x 13.3x 48% 18% ElringKlinger AG $787 $1,553 0.8x 6.9x 13.1x 9.6x 24% 12% Autoneum Holding AG $1,045 $1,412 0.6x 6.3x 9.8x 11.8x 54% 10% GKN plc $0 $0 0.0x 0.0x 0.0x 0.0x 55% 9% International OEM Suppliers Median $5,196 $6,423 0.9x 7.0x 10.5x 10.8x 25% 12%
Source: Capital IQ, data as of August, 2018. www.peakstone.com 6 Automotive Industry Insight | September 2018 Public Trading Comparables by Sector (continued)
Select Automotive Public Trading Comparables
($ in millions) Market Enterprise Enterprise Value / Forward Gross EBITDA Company Name Cap Value Revenue EBITDA EBIT P/E Ratio Margin % Margin %
Aftermarket Retailers and Distributors O'Reilly Automotive, Inc. $25,258 $28,475 3.1x 14.1x 16.1x 18.7x 53% 22% AutoZone, Inc. $19,070 $23,780 2.1x 9.7x 11.2x 13.4x 53% 22% Genuine Parts Company $14,388 $17,260 1.0x 13.3x 15.8x 17.1x 31% 7% LKQ Corporation $10,628 $14,779 1.4x 12.9x 16.5x 13.3x 39% 11% Advance Auto Parts, Inc. $10,711 $11,116 1.2x 12.0x 16.4x 20.3x 44% 10% Uni-Select Inc. $724 $1,190 0.8x 10.1x 13.7x 12.4x 33% 8% U.S. Auto Parts Network, Inc. $47 $47 0.2x 4.1x 9.4x 0.0x 30% 4% Aftermarket Retailers and Distributors Median $10,711 $14,779 1.2x 12.0x 15.8x 13.4x 39% 10% 0 Dealers and Service Providers CarMax, Inc. $13,188 $26,366 1.4x 20.3x 23.6x 15.9x 15% 7% Copart, Inc. $13,340 $13,536 7.8x 19.3x 20.8x 27.6x 48% 41% KAR Auction Services, Inc. $8,048 $11,752 3.3x 13.9x 20.3x 19.7x 43% 24% AutoNation, Inc. $4,247 $10,694 0.5x 11.2x 13.6x 9.9x 16% 4% Penske Automotive Group, Inc. $4,369 $10,107 0.4x 11.5x 13.1x 9.4x 15% 3% Lithia Motors, Inc. $2,088 $5,395 0.5x 10.9x 12.6x 8.6x 15% 4% Group 1 Automotive, Inc. $1,365 $4,168 0.4x 9.0x 10.5x 7.7x 15% 4% Sonic Automotive, Inc. $863 $3,289 0.3x 9.2x 12.5x 9.8x 14% 4% Asbury Automotive Group, Inc. $1,483 $3,306 0.5x 9.8x 10.9x 9.3x 16% 5% Monro, Inc. $2,303 $2,681 2.3x 14.7x 20.1x 28.4x 38% 16% Boyd Group Income Fund $1,837 $2,003 1.6x 18.1x 26.1x 26.3x 46% 9% AutoCanada Inc. $303 $1,022 0.4x 11.5x 13.9x 7.6x 17% 4% America's Car-Mart, Inc. $450 $603 1.0x 12.3x 13.5x 14.3x 49% 8% Dealers and Service Providers Median $2,088 $4,168 0.5x 11.5x 13.6x 9.9x 16% 5% 0 Total Automotive Median $6,891 $9,948 0.9x 8.7x 11.9x 9.7x 19% 11%
Source: Capital IQ, data as of August, 2018. www.peakstone.com 7 Automotive Industry Insight | September 2018 Selected Automotive Industry Transactions
Selected Automotive Transactions
Transaction Date Target / Issuer Size ($mm) Buyers / Investors EV / EBITDA Transaction Comments
Asahi Kasei Corporation (TSE:3407) entered into a definitive agreement to acquire Sage Automotive Interiors, Asahi Kasei Corporation 07/19/2018 $1,060 - Sage Automotive Interiors, Inc. from Clearlake Capital Group, L.P. for $1.1 billion on Inc. (TSE:3407) July 19, 2018.
Grammer AG (DB:GMM) signed a share purchase agreement to acquire Toledo Molding & Die, Inc. from Industrial Opportunity Partners, L.P., fund managed by 05/22/2018 Toledo Molding & Die, Inc. $271 Grammer AG (DB:GMM) - Industrial Opportunity Partners LLC and others for an enterprise value of approximately $270 million on May 22, 2018.
Hidden Harbor Capital Partners, LLC acquired aftermarket division from Cloyes Gear Aftermarket Division of Cloyes Hidden Harbor Capital 05/04/2018 $50 - & Products, Inc. for $50 million on April 4, 2018. The transaction is financed through Gear & Products, Inc. Partners, LLC $41 million of senior secured credit facilities from LBC Credit Partners.
Tenneco (NYSE:TEN) signed a definitive agreement to acquire Federal-Mogul LLC 04/10/2018 Federal-Mogul LLC $5,400 Tenneco Inc. (NYSE:TEN) 7.2x from American Entertainment Properties Corp. for $5.4 billion on April 10, 2018.
Altra Industrial Motion Corp. (NasdaqGS:AIMC) entered into a definitive agreement Thomson Industries, Altra Industrial Motion Corp. to acquire Jacobs Vehicle Systems, Inc., Kollmorgen Corporation, Portescap U.S. Inc. 03/07/2018 Kollmorgen, Portescap and $3,000 - (NasdaqGS:AIMC) and Thomson Industries, Inc. from Fortive Corporation (NYSE:FTV) in a reverse Jacobs Vehicle Systems morris trust transaction for $3 billion on March 7, 2018.
Zhoushan Yinmei Automotive Interior Co., Ltd. made a binding proposal to acquire Zhoushan Yinmei Automotive 02/02/2018 Car Sun Visor Related Assets $147 - Car Sun Visor related assets from Motus LLC, ACR II Motus Integrated Technologies Interior Co., Ltd. Coöperatief U.A. and others for approximately $150 million on February 2, 2018.
Keystone Automotive Operations, Inc. signed an agreement to acquire aftermarket Warn Industries, Inc., Keystone Automotive 10/19/2017 $250 - business from Warn Industries, Inc. for $250 million on September 30, 2017. The Aftermarket Business Operations, Inc. transaction is subject to customary closing conditions.
Source: Capital IQ. www.peakstone.com 8 Automotive Industry Insight | September 2018 Selected Automotive Industry Transactions (cont.)
Selected Automotive Transactions
Transaction Date Target / Issuer Size ($mm) Buyers / Investors EV / EBITDA Transaction Comments
SF Motors Inc. acquired InEvit Inc. for $33 million on October 17, 2017. SF Motors 10/17/2017 InEvit Inc. $33 SF Motors Inc. - Inc. will acquire InEvit by way of cash payment and share issuance, of which $19.8 million will be paid in cash while $13.2 million will be paid in shares.
Cummins Inc. (NYSE:CMI) entered into an asset purchase agreement to acquire 10/16/2017 Brammo, Inc. $168 Cummins Inc. (NYSE:CMI) - Brammo, Inc. for approximately $170 million on October 16, 2017. Cummins Inc. agreed to pay approximately $70 million in cash at closing.
WABCO Automotive Control Wabco Automotive Control Systems, Inc. and WABCO Vehicle Control Systems LLC Remaining 50% Stake in 3 09/18/2017 $250 Systems, Inc.; WABCO Vehicle - entered into an agreement to acquire remaining 50% stake in WABCO for $250 Companies Control Systems LLC million.
Meritor, Inc. (NYSE:MTOR) acquired product portfolio and related technologies of 09/05/2017 Fabco Holdings, Inc. $34 Meritor, Inc. (NYSE:MTOR) - Fabco Holdings, Inc. for $34 million on August 31, 2017.
AM General LLC, Commercial SF Motors Inc. entered into a definitive agreement to acquire commercial 06/22/2017 $110 SF Motors Inc. - Automotive Assembly Plant automotive assembly plant from AM General LLC for $110 million on June 22, 2017.
Lexington Seating Lippert Components, Inc. acquired marine and RV seating business of Lexington 05/22/2017 Corporation, Marine and RV $40 Lippert Components, Inc. - Seating Corporation for $40 million on May 22, 2017. Seating Business
Sirius XM Holdings Inc. Sirius XM Holdings Inc. (NasdaqGS:SIRI) acquired Automatic Labs Inc. for 04/27/2017 Automatic Labs Inc. $108 - (NasdaqGS:SIRI) approximately $110 million on Arpil 18, 2017.
Source: Capital IQ. www.peakstone.com 9 Automotive Industry Insight | September 2018 Selected Automotive Industry Transactions (cont.)
Selected Automotive Transactions
Transaction Date Target / Issuer Size ($mm) Buyers / Investors EV / EBITDA Transaction Comments
The Eastern Company (NasdaqGM:EML) acquired Velvac Holdings for $39.5 million The Eastern Company 04/04/2017 Velvac Inc. $40 - on April 3, 2017. The Eastern Company may pay Velvac a future earnout payment (NasdaqGM:EML) based on growth of Velvac’s Road-iQTM business.
SCHROTH Safety Products TransDigm Group Incorporated (NYSE:TDG) acquired SCHROTH Safety Products TransDigm Group 02/22/2017 GmbH and TAKATA Protection $90 - GmbH and TAKATA Protection Systems Inc. from Takata Corporation (TSE:7312) for Incorporated (NYSE:TDG) Systems Inc. $90 million in cash on February 22, 2017.
Flex Ltd. (NasdaqGS:FLEX) entered into a definitive agreement to acquire AGM Automotive LLC from Triangle Capital Corporation, Trive Capital and others on 02/21/2017 AGM Automotive, LLC $220 Flex Ltd. (NasdaqGS:FLEX) - February 21, 2017. Flex intends to fund the acquisition from currently available resources.
Dover Corporation Kinderhook Industries acquired Performance Motorsports, Inc. from Dover 02/14/2017 Racing Winning Brands $150 (NYSE:DOV); Kinderhook - Corporation (NYSE:DOV) for $150 million on February 14, 2017. Industries
U.S. Manufacturing Dana Incorporated (NYSE:DAN) entered into a definitive agreement to acquire Dana Incorporated 02/13/2017 Corporation, Michigan $100 - Michigan Operations from U.S. Manufacturing Corporation for approximately $100 (NYSE:DAN) Operations million on February 13, 2017.
CIE Automotive, S.A. Cie Automotive, S.A. (BME:CIE) entered into a definitive agreement to acquire 02/05/2017 Newcor, Inc. $106 - (BME:CIE) Newcor, Inc. from EXX Inc. for approximately $110 million on February 5, 2017.
Enstar Holdings (US), Inc. acquired membership interest in Dana Companies, LLC 12/30/2016 Dana Companies, LLC $92 Enstar Holdings (US), Inc. - from Dana Incorporated (NYSE:DAN) for $91.5 million on December 30, 2016. The purchase price is subject to customary closing balance sheet adjustments.
Source: Capital IQ. www.peakstone.com 10 Automotive Industry Insight | September 2018 Peakstone Momentum
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www.peakstone.com 11 Automotive Industry Insight | September 2018 Automotive Industry Expertise Peakstone principals have completed over 100 transactions totaling $125 billion in value
Selected Automotive M&A and Financing Deals
. Phillips & Temro acquired by Harbour Group . Parker Hannifin Acquisition of Wynns International . MW Industries acquired by Genstar . Sale of Detroit Diesel to DaimlerChrysler (Fairness Opinion) . $75 million credit facility for subprime installment lender, primarily for pre-owned cars . Restructuring Advisory Assignment for Amsted Industries through independent dealers . Sale of Eaton Corp’s Automotive Switch business to Delphi Automotive . Sale of Reatruck.com to THI, a TA portfolio company . Sale of Dana’s Boston Weatherhead division to Eaton Corp . Sale of Delphi’s Thermal products business to Mahle . Sale of American Tire Distributors to Investcorp . Acquisition of MVL, an electrical connectors supplier, from Bain-owned FCI . Acquisition of subsidiaries of Grand Vehicle Works by Navistar International . Acquisition of Unwired Technologies, an automotive infotainment components . Sale of Big Ten Tire to Sun Capital supplier . Acquisition of Key Safety Systems by Crestview . Acquisition of Antaya Technologies, an electrical connectors supplier . Acquisition of Chrysler by Cerberus . IAA/Adesa $2.9Bn Acquisition Financing . Advisor to GM on Delphi Bankruptcy . United Auto Group $130MM Equity Follow-on Offering . Sale of Chicago Miniature Lighting to AGM Automotive . United Auto Group $300MM High Yield Debt Offering . Sale of Finnveden Metal Structures to Shiloh Industries Inc. . Investment in Ottomatika, an early stage developer of software for automated vehicles . Advisor to TriVero Group on the Acquisition and Financing of BTM Company . Sale of Delphi’s Italian aftermarket Thermal products business . Sale of Control-Tec LLC to Delphi Automotive . Federal-Mogul Acquisition of Fel-Pro . Tenneco Automotive High Yield Debt Offering . Federal-Mogul Acquisition of T&N . American Axle & Manufacturing $150MM Convert/$250MM Debt/$600MM . American Tire Distributors $330MM Acquisition Financing Synd . DaimlerChrysler $2.0Bn ABS Offering . TRW Automotive $675MM Initial Public Offering . RaySat $25MM Equity Private Placement . BMW of North America $1.5Bn ABS Offering . Microheat $30MM Debt Private Placement . Ford Motor Credit $1.9Bn ABS Offering . Key Safety Systems $495MM Acquisition Financing . Navistar International $250MM High Yield Debt Offering . Hilite International $190MM Bank Financing . Lear Corporation $400MM High Grade Debt Offering . Lear Corporation Acquisition of UT Automotive . DaimlerChrysler $1.5Bn High Grade Debt Offering . Borg-Warner Acquisition of Kuhlman Corporation . TRW Automotive $300MM HY Liability Mgmt/$1.9Bn Synd . Sale of Kuhlman Electric (division of Borg-Warner) to The Carlyle Group . Tenneco Automotive $500MM High Yield Debt Offering . Sale of Coleman Cable (division of Borg-Warner) to group of equity investors . GMAC $2.5Bn High Grade Debt Offering . Sale of Gresen (division of Dana Corp) to Parker Hannifin . BMW of North America $750MM Debt Private Placement
. Sale of stake in Mitsubishi Motors to DaimlerChrysler . Dana Corporation $890MM Debt Tender/ $450MM Debt Offering
. Sale of Cambridge Industries to Meridian Automotive . Navistar International $400MM High Yield Offering
www.peakstone.com 12 Automotive Industry Insight | September 2018 Contact Us
About Peakstone
Peakstone is an investment bank that specializes in mergers and acquisitions advisory and capital raising for middle market clients. Our team is comprised of senior investment banking professionals who have decades of experience and have executed hundreds of transactions totaling billions of dollars. For additional information, visit www.peakstone.com .
Contact
Alex Fridman Patrick Cronister Managing Director Senior Analyst [email protected] [email protected] 312-204-7300 312-346-7352
www.peakstone.com 13