On February 9th Valeo announced that it had signed an agreement with Siemens to acquire a 50 per cent stake in Valeo Siemens eAutomotive for 277 million euros ($317 million) and would hold a 100 per cent stake in the company. EAutomotive of Valeo Siemens will be incorporated into the Valeo's "Powertrain Systems" Business Group) from July 1, 2022.
The deal will increase Valeo's net debt by 741 million euros. But Mr Valeo said the department expected to break even this year on the basis of free pre-tax cash flow and increase income and profit margins in the coming years. Siemens said the sale would increase its second-quarter profit by 200 million euros and consolidate its transition from equipment to software.
Christophe Perillat, CEO of Valeo, 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 right. "
The integration of Valeo Siemens eAutomotive and Valeo Power Systems has strengthened its position in the fast-growing electrification market. Valeo Power Systems is expected to have sales of 5.4 billion euros in 2021, with a current goal of annual sales growth of more than 12 percent. This means that by 2025, combined sales are expected to exceed 8.5 billion euros.
Currently, auto parts manufacturers are adjusting their business to keep up with the accelerated transition to electric vehicles. Foggia acquired rival Hella to improve the quality of its electrified products and announced new financial targets and group name FORVIA this week.
Valeo and Siemens jointly founded Valeo Siemens eAutomotive GmbH, in 2016 to produce motor, axle and powertrain electronics for plug-in hybrid and pure electric vehicles. Valeo said that by the end of 2022, more than 90 electric and plug-in hybrid models will be installed with the company's products.
Perillat also stressed that the electrification market has "very strong growth" and is expected to reach 92 billion euros by 2030, with an annualized growth rate of 17.5 per cent. Carmakers such as Stellantis and Volkswagen are launching new electric models and production plans, but it is unclear how much major components such as motors will be produced on their own. Perillat reiterated its previous forecast that 40 per cent of the supply of electric car parts from automakers would be outsourced to auto parts suppliers.
