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CV & NRMM SERVICES
M&A Briefing
www.kgpauto.com
In collaboration with
Briefing 9
KGP’s Briefings for the Commercial Vehicle and Non-Road Mobile Machinery Markets
Page | 1 E: [email protected] W: www.kgpauto.com T: +44 1332 856301
KGP, a management
and technology con-
sultancy, has special-
ised in the Commeri-
cal Vehicle (CV) and
Nonr-Road Mobile
Machinery (NRMM)
market for 30 years.
See our website for
information on:
Regular Services
• CV Engine and
Aftertreatment
Forecast
• NRMM Engine and
Aftertreatment
Forecast
New Services
• NRMM Driveline
Forecast
• NRMM Hybridisa-
tion and Electrifica-
tion Forecast
• CV Hybridisation
and Electrification
Forecast
KGP’s Partners:
As the automotive world prepares for the
most significant changes in decades,
OEMs and Tier 1 Suppliers are beginning
to strategically position themselves in order
to be successful in the ‘new-look’ industry.
Joint ventures, mergers and acquisitions
will play a vital role in this, OEMs and sup-
pliers which fall behind in strategic invest-
ment, could suffer in the coming years.
This briefing reviews 2017’s M&A activity
and high-profile JVs and also introduces
KGPs financial analysis of both the CV
and NRMM markets.
Top 10 M&A of 2017
Figure 1 Top 10 M&A in 2017 ($/m)
In the NRMM market, the biggest acquisi-
tion of 2017 was John Deere purchasing
Wirtgen Group for $5.2 billion. Wirtgen spe-
cialises in road construction equipment with
annual sales of €2.59 billion in 2016. The
acquisition of this German based company
supports Deere’s long-term aim to expand
both the agriculture and construction busi-
ness globally.
Komatsu completed their acquisition of U.S.
based manufacturer of mining machinery
Joy Global in April 2017 for approximately
$3.7 billion including and debt. The acquisi-
tion allows Komatsu to offer a full range of
mining solutions and adds over 10,000 em-
ployees with strong mining industry experi-
ence and knowledge. For the year ending
October 2015, Joy Global generated sales
of $3.2 billion with a net loss of $1.2 billion.
In April 2017, AAM completed their $3.3 bil-
lion acquisition of Metaldyne Performance
Group (MPG) who generated net sales of
$3.0 billion in 2015. MPG produce compo-
nents for powertrain and safety solutions for
light, commercial and industrial OEMs. The
acquisition will broaden AAM’s capabilities
as a Tier 1 automotive supplier. An addition-
al benefit of the acquisition is the reduction
of reliance on General Motors who are cur-
rently AAM’s largest customer generation
revenue of $7 billion for the company.
Atlas Copco’s re-focussing saw it sell its
road building business to the larger compet-
itor, Fayat Group in mid-2017.
Some of the most interesting M&A activity of
the past couple of years has been the sale
of Terex’s construction machinery business
to a variety of manufacturers. The sale start-
ed back in in 2009 when Bucryrus pur-
chased Terex’s mining division, and contin-
ued in 2014 with Volvo buying Terex’s haul-
er business for $160m. Then in 2016 three
acquisitions occurred with Yanmar purchas-
ing the compaction equipment business in
Germany for $60m; Mecalac buying the
backhoe loader and site dumper business in
Coventry; and Manitou acquiring Terex
Equipment Private Limited based in India.
Manitex also purchased the 49% of ASV, a
skid-steer manufacturer that partly owned
with Terex. In addition to construction equip-
ment, Konecranes has bought Terex’s ma-
terial handling and port solutions business
for $795m. The sale of the construction ma-
chinery business was to allow Terex to fo-
cus on cranes, access equipment and
crushing/screening equipment. Although
2017 sales were down 1.8%, due to the
M&A activity, fourth quarter sales were up
9% in comparison to 2016 for Terex signal-
ling strong performance in the global crane
market.
Hitachi is to increase it’s North American
sales network, to promote the launch of its
Social Innovation Business, along with
strengthening its air compressor business
by acquiring manufacturer Sullair. The ac-
Briefing Paper # 9 – Strategic Positioning —
M&A in CV and Non-Road Sector Paris Kiernan, Senior Analyst
Company Acquired Value ($/m)
John Deere Wirtgen 5200
Komatsu Joy Global 3700
AAM Metaldyne 3300
Various Terex 1250*
Hitachi Sullair 1245
Timken Various 500*
Dana Brevini and U.S. Mfg 445
Fayat Atlas Copco 400*
BorgWarner Sevcon 200
WABCO R.H. Sheppard 145
Mahindra Erkunt Traktor Sanayii 117
*estimate
KGP’s Briefings for the Commercial Vehicle and Non-Road Mobile Machinery Markets
Page | 2 E: [email protected] W: www.kgpauto.com T: +44 1332 856301
KGP, a management
and technology con-
sultancy, has special-
ised in the Commeri-
cal Vehicle (CV) and
Nonr-Road Mobile
Machinery (NRMM)
market for 30 years.
See our website for
information on:
Regular Services
• CV Engine and
Aftertreatment
Forecast
• NRMM Engine and
Aftertreatment
Forecast
New Services
• NRMM Driveline
Forecast
• NRMM Hybridisa-
tion and Electrifica-
tion Forecast
• CV Hybridisation
and Electrification
Forecast
KGP’s Partners:
quired company will cost a value of $1.245
billion which Hitachi will pay to the parent
Accudyne Industries.
Dana acquired 80% of the power-
transmission and fluid power business of
Brevini Group with the remainder to be pur-
chased by 2020. The total value equates to
$325m and will expand Dana’s current
product portfolio in the NRMM. The acquisi-
tion will also benefit Dana’s initiatives for
hybridisation and electrification. Dana has
also purchased the production operations of
U.S. Manufacturing Corporation for $100m,
this will bring new processes technologies
for Dana’s light-weighting products.
Timken growth strategy has been M&A fo-
cussed for the last 7 years, after their first
major acquisition in 2010. Since then the
company has spent over $1 billion with their
largest acquisition this year purchasing
Groeneveld Group, supplier of on- and off-
highway lubrication solutions, for $280 mil-
lion. In addition to Groeneveld Group, Tim-
ken has also acquired Torsion Control, ABC
Bearings and PT Tech in 2017 along with
Lovejoy and EDT Corporation in the previ-
ous year.
BorgWarner, who serve both the CV and
NRMM market, acquired Sevcon a global
player in electrification technologies. The
acquisition totalled $200m and will aid
BorgWarner in providing propulsion sys-
tems for all applications: combustion, hybrid
and electric. In a similar vein, albeit for
what was likely to be a lower, but undis-
closed transaction price, Federal Modul ac-
quired Controller Powertrain Technologies,
a spin off of powertrain technologies from
Visteon back in 2007.
WABCO has purchased R.H. Sheppard,
who specialise in steering solutions for the
CV market, for $145m. This will benefit
WABCO’s intention of providing break
through technology for active steering to the
CV market.
Mahindra have entered the Turkish tractor
market by acquiring Erkunt Traktor the
fourth largest tractor manufacturer in Turkey
holding 6% market share. In 2016, the Turk-
ish company sold 4700 tractors with reve-
nue of $88m.
Other M&A in the AG sector has been fo-
cussed on implements, with many transac-
tions over the past few years. AGCO
closed its acquisition of Lely’s forage busi-
ness in October 2017, acquiring the brand
and its Dutch plant.
On the CV side Knorr-Bremse made seven
acquisitions in 2016 adding and extra €1
billion in sales for the company. Three of
the acquisitions were commercial vehicle
specialised in commercial vehicles: GT
Group a UK supplier of engine air manage-
ment systems, Bosch’s CVS transmission in
Japan, tedrive Steering Systems based in
Germany allows Knorr-Bremse to enter the
steering business. The acquisition of Voss-
loh Kiepe who are mainly in the rail industry
also add to Knorr-Bremse commercial vehi-
cle business as they provide electrical sys-
tems for buses.
Knorr-Bremse hoped to acquire the Swe-
dish based brake system manufactures for
commercial vehicles. However the bid has
been terminated as the deal could not be
completed inside the current acceptance
period after Haldex withdrew their support
for the merger. However, the company has
successfully entered a joint venture with
DongFeng to produce AMTs for the Chi-
nese CV market.
Joint Ventures
Some interesting joint ventures have been
agreed during the last year, especially in the
CV market, with Navistar and VW and
Eaton and Cummins partnering as well as
the re-combining of Ashok Leyland and Hi-
no. In the NRMM market, the Liebherr and
Kamaz joint venture looks an exciting pro-
spect.
Volkswagen truck and bus purchased a
16.6% stake in North American truck manu-
facturer Navistar in September 2017, after
agreeing an alliance in March. The partner-
ship will result in an all-electric medium-duty
truck launched by 2019 in North America.
The two companies will also collaboratively
work on digitisation and connection of
trucks and big bore diesel powertrains. The
alliance is expected to save the two compa-
nies $500 million in the first five years.
Navistar and Volkswagen already had a co-
operation to produce the Navistar Big Bore
engine, which was originally 11 and 13l,
with the 11l later dropped.
Ashok Leyland continue their long-term
KGP’s Briefings for the Commercial Vehicle and Non-Road Mobile Machinery Markets
Page | 3 E: [email protected] W: www.kgpauto.com T: +44 1332 856301
KGP, a management
and technology con-
sultancy, has special-
ised in the Commeri-
cal Vehicle (CV) and
Nonr-Road Mobile
Machinery (NRMM)
market for 30 years.
See our website for
information on:
Regular Services
• CV Engine and
Aftertreatment
Forecast
• NRMM Engine and
Aftertreatment
Forecast
New Services
• NRMM Driveline
Forecast
• NRMM Hybridisa-
tion and Electrifica-
tion Forecast
• CV Hybridisation
and Electrification
Forecast
KGP’s Partners:
partnership with Hino to add Mutual Coop-
eration Agreement in which Ashok Leyland
will use Hino’s engine technology to devel-
op Euro VI and BS VI engines. Hino will
strengthen its competitiveness in India by
using Ashok Leyland to supports their en-
gine parts procurement
Eaton and Cummins have joined together to
form Eaton Cummins Automated Transmis-
sion, with Cummins to pay $600m to Eaton
for 50% of the JV. The JV will benefit Cum-
mins’ growth strategy to increase product
offerings and extend their global presence.
The JV will provide transmissions for the
medium and heavy-duty CV market, with
Endurant being the first product developed
by the JV. Cummins recently also went on
to acquire Brammo, a CV battery supplier in
October 2017 and Johnson Matthey’s bat-
tery business at the end of January 2018,
strengthening its intent to no longer be con-
sidered ‘just’ an engine producer (even
though it has strong component companies
already in the exhaust, filter and turbo-
charger business). On the transmission
side Valeo also finally completed the acqui-
sition of FTE Automotive, agreed in 2016.
Liebherr and Kamaz’s JV started production
January 2018 for their jointly developed 6-
cylinder diesel engine. The JV engine will
be the most advanced engine family for
KAMAZ as they seek to enter new markets
and optimise products for customers.
Spin-Offs
During 2017 there was a number of compa-
nies re-positioning in the supply chain. In
late 2017 Delphi Automotive split itself into
Delphi Technologies, focussed on power-
train systems, and Aptiv Plc on autonomous
vehicle technologies.
Bosch Automotive sold its conventional al-
ternator and starter business to a Chinese
manufacturer, ZMJ, with the division being
renamed SEG Automotive under the new
parent.
More is to come in 2018 as Honeywell splits
the company, with its Turbocharger busi-
ness to become a standalone entity sepa-
rate from the aerospace and domestic busi-
ness units. GKN’s future is also uncertain
at the time of publication.
Impact...
With the growing pressure of clean air,
TCO and technology advancements forc-
ing society and OEM/operators drivers to
converge, we are seeing M&A and JV in-
tensifying as suppliers and OEMs are
forced to work together in order to meet
future market requirements. Companies
are becoming more vertically integrated
and supply chain relationships are becom-
ing more frequent and closer.
The electrification hype is fuelling invest-
ments, for example, with both Cummins
and Deutz both acquiring companies who
specialise in electronics in 2017/8 we ex-
pect to see a real shift in the supply chain
for electrification in both the CV and
NRMM markets. A briefing focused on this
topic will be realised in April along with
KGP’s new hybrid and electric study.
Its an interesting time for the players in the
industry as they need to assess an unpre-
dictable future market in order to correctly
time investments and enhance production
portfolios. OEM and suppliers strategy
could reap massive rewards or very dam-
aging losses as the industry changes over
the next decade… only time will tell who
these winners and losers will be.
KGP has spent many years analysing the CV and Non-Road supply chain and is currently developing a model of the financial structure of the segment. It is difficult to include all companies within the analysis but we seek to include all companies with over $250m CV and Non-Road turnover, including machine OEMs. Up and coming tech firms and niche machine OEMs are also includ-ed. The total list covers over 1,000 com-panies in the sector. Analysis covers basic SWOTs - what are the companies key SWOT factors. What sectors does it operate in. What share of the business in total is CV or Non-Road related?
What can it tell you? Which are the top 5 component growth segments? Who are the top 10 players in each segment. Who are the fastest growing mainstream man-ufacturers? Who are the new entrants to watch? Which segments are most at risk from the current drivers? What is the es-timated commodity purchasing from each segment? Which companies may be partner or M&A targets?
KGP’s Briefings for the Commercial Vehicle and Non-Road Mobile Machinery Markets
Page | 4 E: [email protected] W: www.kgpauto.com T: +44 1332 856301
KGP, a management
and technology con-
sultancy, has special-
ised in the Commeri-
cal Vehicle (CV) and
Nonr-Road Mobile
Machinery (NRMM)
market for 30 years.
See our website for
information on:
Regular Services
• CV Engine and
Aftertreatment
Forecast
• NRMM Engine and
Aftertreatment
Forecast
New Services
• NRMM Driveline
Forecast
• NRMM Hybridisa-
tion and Electrifica-
tion Forecast
• CV Hybridisation
and Electrification
Forecast
KGP’s Partners:
Meet us!
KGP will be attending various industry events in Spring 2018. Contact us to arrange a free con-
sultation on Single Client, Multi-Client and Special Reports at any of the following:
• Intermat - 23rd to 28th April - Paris, France
• Integer Europe - 26th to 28th June - Brussels, Belgium
We can also prepare a client specific webinar to introduce our services and provide an industry
overview.
New Products in 2018
• Non-Road Mobile Machinery Electrification and Hybridisation - A Critical Impact Report
• Non-Road Mobile Machinery Electrification and Hybridisation Production Forecast
• Commercial Vehicle Electrification and Hybridisation – A Critical Impact Report
• Commercial Vehicle Electrification and Hybridisation Production Forecast
Briefings
KGP’s free briefings are published twice per month covering Commercial Vehicle and Non-Road
Mobile Machinery topics. Forthcoming briefings will include:
References
• KGP’s Q3 2017 NRMM Engine and Aftertreatment Market Summary Report:- Click Here
• Off-Highway Research International Database Service - Click Here
• KGP’s Q4 2017 CV Engine and Aftertreatment Market Summary Report:- Click Here
• LMC Global Commercial Vehicle Forecast - Click Here
Contacts
Alex Woodrow, Managing Director
James Dorling, Head of NRMM Services
Paris Kiernan, Analyst
Mick Beeson, Sales Manager
Knibb, Gormezano and Partners
6 Lancaster Park, Newborough Road, Needwood, Staffordshire, DE13 9PD UK
Disclaimer
Information contained in this document has been obtained by Knibb, Gormezano & Partners
from industry sources believed to be reliable. However, because of the possibility of human or
mechanical error by our sources, Knibb Gormezano does not guarantee the accuracy, adequa-
cy, or completeness of any information and is not responsible for any errors or omissions or for
the results obtained from the use of such information.
Copyright Knibb, Gormezano and Partners 2018
10 11 12 13
Briefing NOx Emis-
sions
Batteries for
CV and NRMM
CV CO2
Legislation
Electrification
Supply Chain
Week
commencing
19/03 02/04 16/04 30/04