F R E D E R I C K S M I C H A E L & CO. M E R G E R S | A C Q U I S I T I O N S | D I V E S T I T U R E S Mergers & Acquisitions The Future of The Auto Parts Industry Member of SIPC and FINRA December 2020 Table of Contents I. Introduction to FM&Co. II. Auto Sector – Key Trends III. Auto Parts Suppliers – Strategic Development by Segment A. Powertrain B. Chassis C. Interiors IV. Corporate Venture Capital Investors in the Automotive Space V. Team Biographies VI. Appendix 22 Private & Confidential Overview of Fredericks Michael & Co. Global Reach in Mergers and Acquisitions… ▪ A global investment bank providing clients with discerning and unbiased advice ▪ Founded in 1984 – over thirty-five years of experience ▪ Extensive global network with a proven track record in over 25 countries ▪ Broad expertise and capabilities focused on: Mergers & Acquisitions (buy-side/sell-side), Joint Ventures, Capital Raising Solutions ▪ 30 employees comprised mostly of veteran advisors with many decades of relevant industry experience 35+ 30 Years of Experience Employees 25+ 8+ Countries Covered Languages Spoken 33 Private & Confidential Fredericks Michael & Co. – Key Attributes ...Providing Independent, Comprehensive, Cross-Border Advice… ▪ Proven Focused Approach ▪ Global in Reach and Practice ▪ Target clients. For over three decades, Fredericks Michael ▪ Global reach. Regional headquarters in New York, London & Co. (“FM&Co.”) has served as a financial advisor to large and São Paulo with extensive transaction experience and corporations, private and family-controlled businesses, and presence in over 25 countries financial sponsors ▪ Local expertise. Team of seasoned, multinational ▪ Core services. Advising clients seeking to expand, professionals provide clients the critical local knowledge, consolidate or rationalize their operations across Europe, cross-cultural understanding and industry relationships the Americas, and Asia needed to carry out transactions almost anywhere ▪ Select industries. Our team has developed close ▪ Cross-Border transactions. Most of our advisory relationships with senior executives in leading companies in engagements involve cross-border transactions leveraging the industries we focus on. Our firm’s institutional knowledge our team’s skill-set, experience and relationships and experience in these industries ensures we provide our clients with timely, actionable, and informed perspectives ▪ Long-Term Client Relationships ▪ Experienced and Tenacious ▪ Relationships that transcend individual transactions. We ▪ Veteran, experienced advisors in every transaction, focus on building trust, establishing credibility, and every step of the way. By staffing assignments with senior developing longstanding relationships level professionals, we help our clients navigate complex opportunities, anticipate challenges, and realize their goals ▪ Repeat engagements. Most of our advisory engagements involve previous clients or companies with whom our firm’s ▪ Relentless. Our firm is known for its unwavering approach senior bankers have established relationships dating back in all aspects of a transactions regardless of size. Leaving many years no stone unturned is our mantra 44 Private & Confidential Fredericks Michael & Co. – Capabilities …And Focused on Unlocking and Executing Complex Transactions Buy-Side ✓ Providing Access to Global Industry Knowledge and Participants ✓ Execution of exhaustive search & screen analyses and target approaches ✓ Initiating unique one-on-one transactions, avoiding auctions Sell-Side ✓ Providing senior access to companies ✓ Sale of non-core and underperforming assets ✓ Structuring complex transactions ✓ Sale of family businesses with generational ✓ Remaining involved in all details of transaction through closing challenges ✓ Targeting international as well as local, strategic and financial buyers ✓ Exhaustive effort to maximize price ✓ Solutions oriented to ensure transaction closing ✓ Remaining involved in all details of transaction through closing Trusted and Differentiated Advisory Services Capital Raises ✓ Advising on capital raises for corporate growth ✓ Accessing international investors with specific industry and/or geographic interests ✓ Exhaustive effort to maximize success ✓ Solutions oriented to ensure transaction closing ✓ Involved in all details of closing Joint Ventures ✓ Initiating unique transactions that create value through corporate partnerships ✓ Unlocking value without immediate sale of the business ✓ Providing entry to new geographic markets with the experience of local partners ✓ Structuring of shareholder agreements with appropriate exit options 55 Private & Confidential Fredericks Michael & Co. – Global Reach and Industry-Wide Expertise ▪ Global reach is increasingly important for all types of transactions ▪ FM&Co. has global expertise coupled with local knowledge in the major markets London New York FM&Co. maintains a network of partners across Hong Kong the APAC region that it can leverage and collaborate with on an ad hoc basis São Paulo Headquarters Regional Office FM&Co. APAC Partners Transaction Experience 66 Private & Confidential Key Auto Parts Sector Relationships FM&Co. has relationships with the key stakeholders in the Auto Parts sector 77 Private & Confidential Sell-Side M&A Experience in the Auto Parts Suppliers Sector FM&Co.'s role in this engagement Local Market knowledge – Provided Ruukki with knowledge of Europe and Germany-based financial sponsors, of which Arques Finland ultimately acted as a counterparty in the transaction has sold its subsidiary Comprehensive Search & Screen – FM&Co. completed a thorough process of identifying and contacting potential strategic and financial buyers, of which Arques was the ideal candidate Germany Senior Level Target Approach – Identified, profiled and approached potential buyers and ownerships on no-name basis in to order to determine possible interest and later introduced them to the opportunity Evaluation of Potential Buyers – Advised Ruukki on the selection of potential buyers to consider, on valuation of the target metrics and on potential structures to meet Ruuki’s objectives Germany Due Diligence – Assisted, advised, coordinated, and guided Ruuki through the due diligence process, assisting them in successfully divesting their subsidiary, Carl Froh GMBH 88 Private & Confidential Buy-Side M&A Experience in the Auto Parts Suppliers Sector FM&Co.'s role in this engagement Local Market knowledge – Advised Brembo on a potential Advised acquisition in Brazil to assist the company in solving operational issues in the region Comprehensive Search & Screen – Performed exhaustive buy- side mapping and search and screen of potential targets in Brazil, Italy fitting Brembo’s parameters on potential acquisition in Senior Level Target Approach – Identified, profiled and Brazil approached targets and ownerships on no-name basis in order to determine possible interest and later introduced Brembo to opportunities in the market Evaluation of Targets – Advised Brembo on the selection of targets to acquire, on valuation metrics and on potential structures to meet Brembo objectives Negotiations – Assisted, advised and coordinated on behalf of Brembo in the negotiations with the target’s ownership 99 Private & Confidential Table of Contents I. Introduction to FM&Co. II. Auto Sector – Key Trends III. Auto Parts Suppliers – Strategic Development by Segment A. Powertrain B. Chassis C. Interiors IV. Corporate Venture Capital Investors in the Automotive Space V. Team Biographies VI. Appendix 1010 Private & Confidential Auto Parts – Summary ▪ The auto parts supplier market is facing significant disruptions, caused by: (I) decreasing OEM sales, (II) technological shift related to increased prevalence of electric vehicles, and (III) supply-chain disruption caused by COVID-19 pandemic ▪ Auto parts suppliers are dealing with these issues either by (I) focusing on and embracing new technologies not necessarily within their core areas or (II) consolidating the market and remaining focused on their historical verticals – in both cases M&A is the way that auto parts suppliers are achieving these goals ▪ Powertrains, chassis, and interiors are three segments of the auto parts market that are analyzed throughout this document. While these segments are affected to different degrees by the aforementioned technological shifts, key participants in all of them are implementing aggressive M&A strategies to adapt to new market realities ▪ Finally, several Tier 1 suppliers and OEMs focusing on new technologies have already established their respective corporate venture capital (“CVC”) funds, to invest into promising technologies at an early stage Auto parts sector is facing significant disruption which can be navigated through a targeted M&A strategy 1111 Private & Confidential Auto Parts – Key Issues and Resulting M&A Opportunities While OEM and auto parts suppliers are currently dealing with several existential threats to their business, these threats also create opportunities for future growth: 1 EV disruption and overall technology shift in the Opportunity to dominate the market by investing in auto sector makes some products outdated and the companies with necessary skills and know- some obsolete how and becoming technology-agnostic 2 Opportunity for market consolidation, especially in Decreased OEM sales will put a strain on the top the emerging markets where the decrease was line of many suppliers especially severe 3 Opportunity to consolidate smaller suppliers