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Studies find worldwide increase in automotive mergers, acquisitions

Frankfurt/Kronberg. Last year the number of acquisitions and mergers within the automobile industry continued to increase, according to studies by PricewaterhouseCoopers (PwC) and M&A International in Kronberg.

According to PwC, in 2002, transactions by value rose worldwide by 85 percent to $35.1 billion (31.8 billion euros) compared to the previous year. PwC Frankfurt reported that during the same period the number of mergers and takeovers rose by 35 percent to 621.

Some 274 of the merger and acquisitions involved suppliers. Small and medium-sized companies were affected by consolidations, while Tier 1 suppliers were less affected than Tier 2 suppliers. According to the analysts, Tier 2 suppliers are increasingly being put under pressure by Tier 1 suppliers to reduce costs and at the same time increase performance.

Martin Schwarzer, automotive specialist at PwC, said that further consolidation within the supplier industry would depend upon whether small and medium-sized companies are able to obtain the necessary financing from banks and private equity partners to make acquisitions.

M&A International focused its analysis on mergers and acquisitions in which German suppliers took part. In 2001 some 47 acquisitions were made, while in 2002 there were 50, just one shy of the record set in 1998.

German companies concentrated on the national market with 19 acquisitions last year, including auto parts maker Brose Fahrzeugteile taking over Bosch's locking systems division, the engineering service Edscha buying IVM engineering services and Porsche AG acquiring vehicle roof systems specialist CTS Fahrzeug-Dachsysteme.

The number of acquisitions by German companies abroad has fallen from 16 transactions in 2001 to 13 last year, including Continental buying the Russian company Tire Maker and brake systems company Knorr Bremse taking over the British-American corporation Bendix Commercial Vehicle Systems.

According to M&A's study, the number of foreign acquisitions of German companies rose from 14 in 2001 to 18 last year. American companies lead the ranking with eight buys. Varta Automotive was taken over by Johnson Controls and Hilite Industries bought the German company Hydraulik-Ring.

Buyers favored the metal components (7 deals), engineering services (7) and electrics/electronics (6) sectors.

Tags: Suppliers

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