Amidst the growing complexity of automobile electrical and electronic systems, Delphi Automotive will boost that part of its business and expand in similar markets through the acquisition of HellermannTyton Group.
Delphi said 30 July that it agreed to pay €1.07bn for HellermannTyton, a 45% premium on the stock price at the previous day’s close and 14.7 times earnings before interest, taxes, depreciation and amortisation (EBITDA).
Delphi is a global producer of cable-management solutions with US operations based in Troy, Michigan, and a head office in Gillingham, UK. The deal should close in late 2015.
“With consumers now demanding more connectivity in their vehicles, electrical architecture is the enabler to that added vehicle content,” stated Delphi President and CEO Kevin Clark in a news release. The combined businesses will broaden Delphi’s offerings in engineered and customized connection systems and cable management solutions. Along with increasing complexity of vehicle electrical systems, metal replacement by plastics continues in the sector.
Delphi spokesman Chris Euss indicated in a phone interview that there is a lot of synergy in the combination but that HellermannTyton also brings significant non-auto business to the table in markets such as industrial, aerospace, defense, alternative energy and mass transit.
HellermannTyton, based in Crawley, UK, recently expanded its US operations in Milwaukee, where it injection moulds and extrudes components such as fasteners, mounts, connectors and clamps, for cable management and product identification. It supplies Tier 1 suppliers and OEMs such as Navistar International, Ford Motor, Deere & Co, Caterpillar and Daimler Trucks North America. Three years ago Milwaukee employed about 275.
HellermannTyton had 2014 sales of $596.9m (€544.3m), up 11% over the year earlier. In comparison, about 53% of Delphi’s $17bn (€15.5bn) in 2014 sales were booked in electrical/electronics architecture products such as cable management components and connectors. Auto markets account for about 50% of HellermannTyton sales with general electrical markets such as mass transit, defense and alternative energy, representing about 42% of revenue.
Delphi recently made a related acquisition when last December it bought Antaya Technologies Corp of Cranston, R.I. Antaya specialises in wire harnesses that connect with automotive glass for heating, antennas and remote keyless entry, an area in which Delphi was a minor player. Antaya does its injection molding in house.
Euss said no big changes are expected at HellermannTyton.
“The business is well managed and there are synergies of about $50m (€45.6m) initially through supply chain management and other areas,” Euss said.
Delphi makes E/EA components in Warren, Ohio, but the business unit is based in Shanghai.
Vehicle electrical management systems are becoming more critical for safety, convenience, energy efficiency and connectivity. HellermannTyton has been growing 3% to 5% faster than its markets, especially in automotive, Delphi pointed out in documents related to its purchase announcement. It is strong in Asia, where it has been growing at 15% a year or more, where it will enhance Delphi’s stake. HellermannTyton has 12 main global production locations and is highly automated and vertically integrated. It employs about 3,800.