Automotive Trends & Transactions in Canada

Deals driver

Automotive trends & transactions in Canada

February 2016

kpmg.ca/automotive Canadian automotive M&A activity

Despite capital market volatility, we expect merger and —— The availability of skilled labour is limiting the options auto acquisition activity in the Automotive sector to be stable, driven companies have to plan for succession, making a merger by the following factors: or acquisition an attractive option —— Companies will continue to focus on expansion through For further insights of the issues currently facing Automotive the NAFTA corridor and look for other companies that will organizations, be sure to take a look at the KPMG Global help them broaden their market share and complement or Automotive Executive Survey 2016 at diversify their product offerings www.kpmg.ca/globalauto2016 —— The declining CAD dollar with make Canadian automotive companies more attractive to US buyers looking to acquire suppliers north of the border —— Our lower currency will make US acquisitions more expensive for Canadian companies —— Increasing consumer demand for connectivity in vehicles could lead to more deals as traditional OEMs and mobility service technology companies work together in a new digital ecosystem

Valuations of publicly-traded automotive companies (ranked by enterprise value in Canadian dollars)

Capitalization LTM Multiples NTM Multiples Market EV / EV / EV / EV / Company Country EV P/E P/E Cap. Revenue EBITDA Revenue EBITDA Ford Motor Co. United States 77,585 2,22,384 1.1x 12.5x 12.2x 1.1x 13.1x 7.2x General Motors Company United States 73,368 1,23,370 0.6x 6.8x 12.9x 0.6x 5.3x 6.3x Tesla Motors, Inc. United States 43,608 45,578 9.0x n/m n/m 4.0x 52.3x 231.3x Johnson Controls Inc. United States 35,500 44,356 0.9x 10.7x 18.8x 0.8x 7.9x 10.5x Magna International Inc. Canada 22,665 22,174 0.5x 5.0x 9.0x 0.5x 4.6x 8.4x Harley-Davidson, Inc. United States 12,083 20,304 2.5x 11.0x 12.6x 2.7x 10.8x 11.5x The Goodyear Tire & United States 12,189 19,292 0.9x 6.0x 3.3x 0.9x 5.1x 8.6x Rubber Company BorgWarner Inc. United States 13,444 14,619 1.4x 8.1x 16.3x 1.2x 7.2x 13.4x Lear Corp. United States 12,833 14,417 0.6x 6.6x 13.1x 0.6x 6.0x 10.8x Gentex Corp. United States 6,476 6,015 3.0x 8.7x 16.4x 2.6x 7.4x 14.1x Federal-Mogul United States 1,607 5,669 0.6x 7.3x n/m 0.5x 6.2x 9.4x Holdings Corporation Tenneco Inc. United States 3,682 5,338 0.5x 5.4x 14.6x 0.5x 4.7x 9.1x Linamar Corp. Canada 4,867 5,238 1.1x 6.3x 11.9x 0.9x 5.4x 10.2x Nexteer Automotive United States 3,856 4,373 1.1x 9.7x 17.9x 0.9x 7.1x 14.3x Group Limited Metaldyne Performance United States 1,720 4,185 1.0x 6.1x 11.5x 1.0x 5.7x 9.3x Group Inc. Dana Holding Corporation United States 2,928 3,945 0.5x 4.4x 6.5x 0.5x 4.2x 7.7x Thor Industries Inc. United States 4,089 3,840 0.7x 8.4x 14.8x 0.6x 6.9x 12.3x American Axle & United States 1,998 3,610 0.7x 5.3x 8.2x 0.6x 4.4x 6.4x Manufacturing Holdings Inc. Visteon Corporation United States 6,485 3,201 0.3x 3.3x 22.6x 0.7x 7.7x 39.1x Cooper Tire & Rubber Co. United States 2,943 2,846 0.7x 4.2x 9.7x 0.7x 4.5x 11.4x Cooper-Standard United States 1,877 2,689 0.6x 6.3x 18.8x 0.6x 4.8x 9.6x Holdings Inc. Gentherm Incorporated United States 2,381 2,354 2.1x 11.7x 20.5x 1.8x 10.8x 18.4x Dorman Products, Inc. United States 2,338 2,228 2.2x 10.7x 19.7x 1.9x 9.4x 16.9x Drew Industries Incorporated United States 2,040 2,157 1.2x 10.7x 22.1x 1.0x 8.4x 17.2x Martinrea International Inc. Canada 908 1,620 0.4x 5.8x 9.9x 0.4x 5.0x 7.2x Valuation mutiples summary Minimum 0.3x 3.3x 3.3x 0.4x 4.2x 6.3x Median 0.9x 6.7x 13.1x 0.8x 6.2x 10.5x Average 1.4x 7.6x 14.1x 1.1x 8.6x 20.8x Maximum 9.0x 12.5x 22.6x 4.0x 52.3x 231.3x

Source: Capital IQ, as at December 31, 2015

© 2016 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Automotive EV /LTM EBITDA performance (Last 3 years)

18.0x 16.0x 14.0x 12.0x 10.0x 8.0x 6.0x 4.0x 2.0x - Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15

GM Magna Johnson controls Ford Harley Davidson Source: Capital IQ

Canadian M&A activity in the automotive sector (any Canadian involvement)

Country Closed EV/ EV / Target Acquirer EV of target date Sales EBITDA 2015: Top 10 Transactions ZF TRW Automotive Holdings Corp. ZF Friedrichshafen AG US 15-May-15 14,472 0.8x 7.3x Veyance Technologies, Inc. ContiTech AG US 30-Jan-15 2,110 0.9x 7.1x Stackpole International Inc. Johnson Electric International Canada 27-Oct-15 867 1.8x 10.6x Magna Interiors Inc. Grupo Antolín-Irausa, S.A. Canada 31-Aug-15 641 0.2x - Motor Coach Industries New Flyer Industries Inc. US 18-Dec-15 604 0.7x - International, Inc. iBiquity Digital Corporation DTS Inc. US 1-Oct-15 229 3.8x - SEISSENSCHMIDT GmbH Linamar Corp. Germany 15-Jan-15 160 0.5x - Lithium Americas Corp. Western Lithium USA Corporation Canada 4-Sep-15 77 - (15.0)x SpectAL Industries, Inc. Lippert Components, Inc. Canada 24-Apr-15 27 0.9x - Veyance North-American Air Garlock of Canada Ltd.; Stemco US 1-Jul-15 22 - - Spring Business Unit Kaiser Incorporated; EnPro Luxembourg Holding Company S.a.r.l. 2014: Top 10 Transactions Scania AB (publ) Volkswagen AG Sweden 9-Jun-14 33,181 2.2x 17.6x Pinafore Holdings B.V. The Blackstone Group Netherlands 3-Jul-14 7,708 2.4x 12.6x BSH Bosch und Siemens Robert Bosch GmbH Germany 4-Dec-14 9,273 0.6x 7.9x Hausgeräte GmbH Air Distribution Technologies, Inc. Johnson Controls Inc. US 16-Jun-14 1,763 - - Martinrea Honsel Germany GmbH Martinrea International Inc. Germany 7-Aug-14 518 - - 2.4 Million sq.ft. of Mexican Magna International Inc. Mexico 26-Jun-14 109 - - Property Portfolio Race Face Performance Products, Inc. Fox Factory Holding Corp Canada 12-Dec-14 53 2.0x 11.0x Global Thermoelectric Inc. Gentherm Incorporated Canada 1-Apr-14 34 0.9x - Techform Products Limited Magna Closures Inc. Canada 3-Oct-14 26 - - Automotive Leather Company Exco Technologies Limited South Africa 1-Mar-14 25 0.3x - Group (Pty) Ltd. 2013: Top 10 Transactions Ally Financial Inc. Not disclosed US 10-Dec-13 958 0.2x - Stackpole International Inc. CITIC Capital Partners; Canada 10-Oct-13 531 - - Crestview Partners Weststar Aviation Services Sdn Bhd KKR & Co. L.P. Malaysia 7-Oct-13 209 - - Wescast Industries Inc. Sichuan Bohong Industry Co. Ltd. Canada 27-Mar-13 157 0.5x 12.2x Mubea Motorkomponenten GmbH Linamar Corp. Germany 1-Oct-13 25 - - Sides S.A.S. BAVARIA Industries Group AG France 5-Mar-13 14 0.2x - INT Autotechnik GmbH CCL Industries Inc. Germany 3-Apr-13 12 0.5x 5.9x Orange Electronic Co., Ltd. Standard Motor Products Inc. Taiwan 31-Jan-13 25 - - Wheel Hub Business Unit and Triple Diamond Imports, Inc. US 6-Sep-13 1 - - Canadian Wheel Hub Inventory Minit-Charger Access Control Group, L.L.C. Canada 11-Oct-13 0 - - Source: Capital IQ

For more information on how our Automotive industry group can help you, contact one of the following KPMG in Canada professionals

Toronto Southwestern Ontario Peter Hatges Doug Dawdy National Sector Leader, Automotive Partner, Deal Advisory T: 416 777-3614 T: 519 747-8807 E: [email protected] E: [email protected] Bob Jolicoeur National Industry Leader, Industrial Markets National Sector Leader, Chemicals T: 416 777-3733 E: [email protected]

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