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Auto-Parts M&A to See First Gain Since ’11 as TRW Eyed

Auto-supplier deals are poised to increase this year for the first time since 2011, as companies seek new technology and enough heft to meet demand from automakers globally, PricewaterhouseCoopers LLP said.

The number of transactions in the segment should rise 13 percent to about 211 from 186 last year, PwC forecasted in a study. That would be a 30 percent decline from three years ago, according to the analysis, which assessed suppliers as buyers, sellers or financially distressed companies, using data and comments from executives. The value of this year’s transactions should rise 25 percent to $15 billion, PwC said.

Car sales in the U.S., led by trucks and smaller SUVs, are booming, helping fuel a spike in mergers. A resurgent U.S. economy, widely available credit and low interest rates are keeping the annualized selling rate, adjusted for seasonal trends, above 16 million for the fifth straight month.

“This shows heightened interest in the automotive space,” Dietmar Ostermann, the Detroit-based head of PwC’s global auto advisory practice, said in an interview. “Buyers are attracted because of the long-term worldwide growth trends, which benefit the suppliers.”

Deal activity may receive a further boost if German auto-supplier ZF Friedrichshafen AG acquires TRW Automotive Holdings Corp., Ostermann said. ZF is exploring a takeover proposal for Livonia, Michigan-based TRW that could value the car-safety technology provider at as much as $13 billion, people familiar with the matter have said.

Globally, vehicle production is set to grow at a compounded annual rate of 4 percent through 2020, which may pique the interest of private equity, Ostermann said.

Private-equity firms are becoming more involved in auto-supplier acquisitions, representing about 22 percent of all deals in the 12 months through July, compared with 10 percent in 2012, the study showed.

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