The new combined entity, Valeo Powertrain Systems Business Group, will aim for:
- Annual growth of more than 12% during the 2021-2025 period
- Objective of EUR120m in annual synergies, representing 1.9% of sales – synergies to be fully realised from 2025
- Pro forma EBITDA margin to increase rapidly from 5.8% in 2021 to more than 8% in 2022 and more than 11% in 2025
- Pro forma pre-tax free cash flow to break even from 2022, reaching around EUR350m in 2025, enabling the new entity to self-finance its growth
- Acquisition of Siemens’ 50% stake in Valeo Siemens eAutomotive for a cash amount of EUR277m on a debt-free basis – EUR741m increase in Valeo ’s net debt
“The electrification of automotive mobility is accelerating,” said Valeo CEO, Christophe Périllat. “And so is Valeo . This transaction and the integration of Valeo Siemens eAutomotive within our Powertrain Systems Business Group strengthen our position as a major player in electrification by creating a champion equipped with all the associated technologies.
“It also makes us more innovative, competitive and profitable as we play our part in decarbonising mobility. I would like to thank Siemens for all the work we have achieved together over the past few years, positioning Valeo Siemens eAutomotive as a champion of high-voltage electrification.”
Valeo noted it had signed an agreement with Siemens to acquire Siemens’ 50% stake in Valeo Siemens eAutomotive. After 1 July, 2022, 100% of Valeo Siemens eAutomotive will be integrated within Valeo ’s Powertrain Systems Business Group.
Completion of the transaction will result in a net cash outflow of EUR277m for Valeo , representing the acquisition of Siemens’ stake on a debt-free basis. This outflow will be financed by the Group’s available cash. From an accounting point of view, net debt will increase by EUR741m without substantially modifying the overall equilibrium of Valeo ’s financial position. From 2023, the Group plans to reduce its debt according to the roadmap that will be presented on 25 February, 2022, when Valeo announces its strategic and financial outlook for 2022-2025.
Valeo Siemens eAutomotive is a technological and industrial company, present on the main mass-market and premium platforms of 21 automakers. By the end of 2022, more than 90 electric and plug-in hybrid models will be fitted with Valeo ’s electric powertrain systems, motors, inverters or onboard chargers.
The French supplier added integration of Valeo Siemens eAutomotive within Valeo ’s Powertrain Systems Business Group strengthens its position in the fast-growing electrification market. The Powertrain Systems Business Group’s pro forma sales amounted to EUR5.4bn in 2021 and the Group is now targeting annual sales growth of more than 12% for this business. This means sales for the combined entity are expected to reach more than EUR8.5bn by 2025.
The integration of Valeo Siemens eAutomotive should enable the new combined entity to:
- Accelerate its technological roadmap in order to offer its customers increasingly high-performance solutions
- Aim for a synergy objective representing a total annual amount of EUR120m by 2025. These synergies should be achieved progressively, with the full benefit delivered in 2025 (50% in 2023, 75% in 2024 and 100% in 2025)
- Accelerate its growth
The combined entity is expected to generate an EBITDA margin of more than 11% and pre-tax free cash flow of around EUR350m in 2025 (with pro forma pre-tax free cash flow breaking even from 2022).
Given the timing of the transaction and an expected 50% reduction in losses for Valeo Siemens eAutomotive in 2022, compared with 2021, the impact of the consolidation of Valeo Siemens eAutomotive on the Group’s net income will be less than that recorded in 2021.
The project has been unanimously approved by the board of directors and its completion is subject to authorisation by the relevant antitrust authorities.
Relevant employee representative bodies will be informed and consulted.