On February 9, Valeo announced that it has signed an agreement with Siemens to acquire a 50% stake in Valeo Siemens eAutomotive for 277 million euros ($317 million) and will hold a 100% stake in the company. Valeo Siemens eAutomotive will be merged into Valeo's "Powertrain Systems" Business Group from July 1, 2022.
The deal will add Valeo's net debt by €741 million. But Valeo said the division expects to break even on a pre-tax free cash flow basis this year and boost revenue and profit margins in the coming years. Siemens said the stake sale would increase its second-quarter profit by 200 million euros and cement its transition from equipment to software.
Valeo CEO Christophe Perillat said in a telephone interview, "Strategically, this is a very important step for Valeo. The terms of the agreement are good and the timing is opportune. ”
The integration of Valeo Siemens eAutomotive with Valeo PowerTrains strengthens its position in the fast-growing electrification market. Valeo Power Systems' sales are expected to reach €5.4 billion in 2021 and are currently targeting an annual sales growth rate of more than 12 percent. This means that by 2025, consolidated sales are expected to exceed €8.5 billion.
(Image source: Valeo Siemens)
Currently, auto parts manufacturers are adjusting their operations to keep pace with the accelerated transition to electric vehicles. Faurecia acquired rival HELLA to improve the quality of its electrified products and unveiled new financial targets and group name FORVIA this week.
Valeo and Siemens partnered in 2016 to form Valeo Siemens eAutomotive GmbH to produce electric motors, axles and drivetrain electronics for plug-in hybrid and pure electric vehicles. Valeo said that by the end of 2022, more than 90 electric models and plug-in hybrid models will have the company's products installed.
(Image source: Valeo)
Perillat also stressed that the electrification market is "growing very strongly" and is expected to reach 92 billion euros by 2030, with an annualized growth rate of 17.5%. Automakers such as Stellantis and Volkswagen are rolling out new eviction models and production plans, but it's unclear to what extent major components such as motors will be produced autonomously. Perillat reiterated the company's previous forecast that 40% of the supply of electric vehicle parts for car companies will be outsourced to auto parts suppliers.