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LONDON, UK / ACCESSWIRE / August 23, 2017 / Pro-Trader Daily takes a look at the latest corporate events and news making the headlines for Adient PLC (NYSE: ADNT), following which we have published a free report that can be viewed by signing up at http://protraderdaily.com/optin/?symbol=ADNT. The Company announced on August 21, 2017, that it has signed a definitive agreement to acquire privately held Futuris Group. For immediate access to our complimentary reports, including today's coverage, register for free now at:
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Transaction Valuation
- The purchase price for the transaction has been decided at around $360 million. This includes the assumption of approximately $18 million of net debt.
- Adient plans to fund the transaction with its existing cash on hand.
Transaction expected to Expand Adient's Geographical Reach
Bruce McDonald, Chairman and Chief Executive Officer at Adient, highlighted that Futuris Group has a swiftly growing book of business. Thus, the acquisition of Futuris Group would strengthen Adient's position with West Coast customers, improve its utilization rates in North America, and expand its business in Southeast Asia. Moreover, Futuris Group's concentration on local brands in China is complementary to Adient's existing business. He expects the transaction to create greater value for Adient's shareholders.
Futuris Group, which is owned by affiliates of Clearlake Capital Group, is headquartered in Oak Park, Michigan. It is a global designer and manufacturer of fully integrated automotive seating and interior systems. FuturisGroup provides full seating systems, seat frames, seat trim, headrests, armrests, and seat bolsters. It mainly operates in the United States, Mexico, China, and Thailand, and has around 15 facilities in North America and Asia. Its main customers in North America include Tesla, Ford, and General Motors, as well as other automotive seating suppliers, while Geely, Chery, and Brilliance are some of its customers in Asia. In fact, Futuris Group was the first automotive seating Company to focus on West Coast automakers. It has now achieved a growing backlog of business with several of these customers. It has demonstrated proven ability to differentiate with customers on complex, fully integrated, and technologically advanced platforms.
Key Strategic Benefits
- Geographic benefits - The transaction is expected to increase Adient's exposure in faster growing Asian markets, primarily in Thailand and in China. It will also help achieve a positive contribution from North America which has lost volume due to capital constraints.
- Customer Diversity - Futuris Group was the first mover on the West Coast and has a lot of local China brands in its umbrella. The acquisition will provide Adient access to these assets.
- Synergies - The acquisition is expected to provide considerable synergies through vertical integration, footprint consolidation, purchasing, and logistics improvements, and apply the best business practices and process optimization of the Adient Manufacturing System to optimize operational efficiencies.
- Armrests and headrests market - The transaction would also increase Adient's capability in the armrests and headrests market.
Financial Benefits
- Adient expects the transaction to add approximately $500 million in revenue on an annual basis.
- It is forecasted that the transaction will be accretive to Adient's adjusted fiscal 2018 earnings per share.
- The Company expects a positive EBITDA benefit of approximately $55 million in FY18 due to partial achievement of synergies.
- The full achievement of synergies is expected in FY19, which would generate an increase in EBITDA of nearly $20 million.
- Furthermore, the transaction is expected to be cash flow neutral in the first year due to synergy implementation costs. Thereafter, improvements in free cash flow are expected to be in proportion to EBITDA contribution.
- Adient expects that the transaction will have no impact on its corporate credit ratings.
Transaction Closing
The transaction is still subject to regulatory clearance, including antitrust approval. Post which, it is expected to close by September 30, 2017.
About Adient PLC
Adient is a global leader in automotive seating. The Company produces and delivers automotive seating for all vehicle classes and all major OEMs through its 75,000 employees operating 230 manufacturing/assembly plants in 33 countries worldwide. Adient's expertise covers every step of the automotive seat-making process, from complete seating systems to individual components. The Company's outstanding integrated, in-house skills enable it to take its products from research and design to engineering and manufacturing – leading into more than 25 million vehicles every year.
Last Close Stock Review
At the closing bell, on Tuesday, August 22, 2017, Adient's stock climbed 1.68%, ending the trading session at $69.02. A total volume of 869.96 thousand shares have exchanged hands, which was higher than the 3-month average volume of 836.80 thousand shares. The Company's stock price advanced 1.60% in the last one month, 0.69% in the previous three months, and 2.21% in the past six months. Moreover, the stock surged 17.78% since the start of the year. The stock has a dividend yield of 1.59% and currently has a market cap of $6.45 billion.
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