Faurecia submits purchase offer for Clarion in pursuit of cockpit electronics leadership
Clarion, of which Hitachi owns almost 64 percent of the shares, is a Japanese supplier of in-vehicle-infotainment (IVI) and full digital audio systems, HMI and advanced driver assistance systems, connectivity and cloud-based services. With its core competences in electronics and software integration, the acquisition would significantly reinforce Faurecia’s offer for cockpit systems integration.
As part of the transaction, Faurecia and Hitachi Automotive Systems have also reached an agreement for a business alliance within which Clarion and Hitachi Automotive Systems would be able to combine their product offers to propose unique autonomous driving solutions to OEMs.
According to Faurecia CEO Patrick Koller, the business alliance with Hitachi will enable innovative solutions for full autonomous driving to OEMs.
For the fiscal year ending March 2018, Clarion, headquartered in Saitama (near Tokyo), Japan, achieved sales of 183 billion yen (€1.4 bn). It employs 7,500 people and has 7 manufacturing sites (of which 6 are in low cost countries) and a presence in 16 countries. The company has undertaken a major transformation of its product portfolio from its traditional audio/infotainment systems towards its rapidly growing advanced driver assistance and HMI systems, including driver monitoring and autonomous parking.
Faurecia is deploying its cockpit integration strategy based on its positions in seating and interiors. The Group’s ambition is to become the leading supplier of systems for unique user experiences integrated through an electronics management system: the “Cockpit Intelligence Platform”.
As part of this strategy, the Group has built a foothold in connectivity and infotainment through the acquisitions of Parrot Automotive (expert in Android solutions) and a controlling stake in Coagent Electronics in China. The acquisition of Clarion would give Faurecia critical size as a leading player in cockpit electronics and software integration with a strong global presence and a competitive industrial footprint.
The functionalities managed by the Cockpit Intelligence Platform will include advanced safety, intuitive HMI, driver information and assistance, IVI and immersive digital sound, comfort, wellness and thermal management. Creating these personalized user experiences will require occupant monitoring as well as personal and contextual information. With the addition of Clarion’s complementary competences and know-how, in particular for image processing, sensing and driver information, Faurecia will be uniquely positioned to provide innovative and disruptive solutions.
Significant synergies will be realized by leveraging the combined offer for intelligent cockpit hardware and software solutions and the complementary customer, geographic and industrial footprints. For Clarion, this deal would support the expansion of their customer base particularly in Europe and accelerate their strategic transformation. Faurecia would benefit from Clarion’s strong customer relationships to achieve a breakthrough in its presence with Japanese OEMs.
Faurecia intends to create a new Business Group headquartered in Japan, named “Faurecia Clarion Electronics Systems” regrouping all of Faurecia’s competences in this domain. This Business Group would employ almost 9,200 people, more than 1,650 software engineers and have over €2 billion of revenues by 2022.
For the purchase, Faurecia will offer a price of about around €1.1 billion, representing a transaction multiple of 5.7 times March 2018 EBITDA. The transaction is subject to customary regulatory clearances and employee representative consultations.