The Manager Magazine reports that the industrialist family Hueck are considering selling their majority shareholding in automotive supplier Hella. The owner family surprised even the company’s own CEO notion. Hella could be on the verge of leaving the stock market if the family would decide to exit. However, the shares of the shareholder family are still bound by a pool agreement until at least 2024. This means that all 60 members of the partnership must agree.
Hella is present in some of the fastest-growing niches of the automotive business and achieved an EBIT margin of 8 per cent even between June 2020 and February 2021 in the midst of the Corona pandemic. Traditionally, the family business generates solid cash flows. Hella’s product focus is on lighting systems and automotive electronics, and the group employs 36,000 people. In the most recently completed financial year 2019/20, the company achieved sales of €5.8bn. The equity ratio of 39 per cent is above the average for the industry. In addition, the supplier has liquid funds of almost €1bn at their disposal.
More important for Hella than entering lucrative businesses is to advance into lucrative niches where the competitive pressure is not that important. For example, Hella is one of the leading manufacturers of 24-gigahertz radars, which carmakers need for their driver assistance systems. Another core of Hella’s strategy: high spending on research and development. For years, Hella has spent over 9 per cent of its turnover on research and development—a top value in the industry.
Getting access to this company should be tempting for many potential buyers. All large-cap private equity funds are likely to be interested. Hella would also be an attractive addition to the portfolios of numerous large automotive suppliers, but many interested parties are still suffering from the financial consequences of the pandemic, and are struggling with their own restructurings.
