Amidst the growing complexity of automobile electrical and electronic systems, Delphi Automotive plc will boost that part of its business and expand in similar markets through the acquisition of HellermannTyton Group plc.
Delphi said July 30 that it agreed to pay 1.07 billion euros ($1.18 billion) for HellermannTyton, a 45 percent premium on the stock price at the previous day's close and 14.7 times earnings before interest, taxes, depreciation and amortization (EBITDA).
Delphi is a global producer of cable-management solutions with U.S. operations based in Troy, Mich., and a head office in Gillingham, England. 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, England, recently expanded its U.S. operations in Milwaukee, where it injection molds 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 Corp., Ford Motor Co., Deere & Co, Caterpillar Inc. and Daimler Trucks North America LLC. Three years ago Milwaukee employed about 275.
HellermannTyton had 2014 sales of $596.9 million, up 11 percent over the year earlier. In comparison, about 53 percent of Delphi's $17 billion in 2014 sales were booked in electrical/electronics architecture products such as cable management components and connectors. Auto markets account for about 50 percent of HellermannTyton sales with general electrical markets such as mass transit, defense and alternative energy, representing about 42 percent of revenue.
Delphi recently made a related acquisition when last December it bought Antaya Technologies Corp of Cranston, R.I. Antaya specializes 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 $50 million 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 percent 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 percent 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.