PPG Industries Inc., Eaton Corp. and Cummins Inc. are among the automotive suppliers likely to be active buyers amid an expected wave of global consolidation, a new study says.
Already, the global supplier segment is headed toward a record 300 mergers and acquisitions this year, the consulting firm PRTM predicts, which would edge the previous high of about 275 in 2007. Deal-making is heating up after a two-year lull as access to capital improves and some larger players, along with private equity firms, size up companies still licking their wounds from the downturn.
Would-be buyers want to bulk up in core product areas as automakers demand greater scale, said Dietmar Ostermann, global automotive practice leader at PRTM in Dallas. Prospective sellers want to unload noncore or low-margin businesses while shoring up their balance sheets by divesting assets.
Companies that could unload assets over the next year or two include TRW Automotive Inc., Visteon Corp., Delphi Automotive and Faurecia, according to the report from PRTM.
In a statement, Visteon agreed that there likely will be consolidation among suppliers but declined to comment about specific business units, adding, "We have four strong product lines." Delphi, in a statement, called it "speculative" to predict divestitures by the company.