Thanks a lot for dialing in. This is Rolf Breimler speaking. Welcome to this extraordinary investor call. Following the announcement on Saturday that the HELLA owner, family, has decided Sell its 60% stake in HELLA to the French automotive supplier Florecia. Also as always, of course, a very warm welcome from my colleague, Mr.
Gerard Bartold, to all
of you.
Allow me to first start with Some details of the transaction. On Saturday, On the one hand, the pool signed the share price agreement. At 60% in HELLA from the pool shareholders. And furthermore, ForeSeea has announced a public Voluntary public tender offer to acquire the remaining Hella shares. The offer price amounts EUR 60 Per share, assuming a dividend of €0.96 per share, the gross offer price amounts, therefore, to €60.96 per share.
The corresponding this corresponds to a premium of 33% on the closing price of HELLA on the 26th April 2021, which represents the last share price unaffected from the market rumors. Yes, the value of the transaction, I think this is well known, is at €6,800,000,000 We expect that all details of this transaction being public with the start of the tender offer around mid September after approval of the offer document by the German Federal Finance Supervisory authority. And the HELLA management, the Shareholders Committee and the Supervisory Board welcome to the transaction. From a strategic standpoint, the combination of Foricia and HELLA from our perspective makes a lot of Hence, what are the key aspects with this transaction? A new global champion in the automotive industry will be created.
Heller, I think, has a good starting point to expand its market position, especially in areas like electrification, automated assisted driving and also the vehicle interior design. We see a significant Growth potential within this combination of both company. Also The general thinking on how both companies are driving their business, how they are thinking about strategic principles From our perspective, it's very similar, which, of course, will make the integration process much easier. And both companies are driving for market and technology leadership. And I also believe in strong business divisions with a clear P and L responsibility.
In our business combination agreement, which was negotiated between Faurecia and HELLA, We agreed to continue our multi pillar business strategy, focusing on lighting, electronics, aftermarket and special applications. And it was also agreed that the 3 Of the 6 business groups will be headquartered in Lipstadt, and we'll be led from the Lipstadt location. To make sure that the integration process is carried out in an effective and efficient way. An integration committee will be created to supervise the whole approach. And in addition to that, a monitoring committee consisting of the Chairman of ForeSeea, the CEO of ForeSeea, the CEO of HELLA and I think an important member of the shareholder pool.
We'll then also monitor this whole integration As a last, let's say, decision body. The pool shareholders of HELLA will become a relevant shareholder for ASEA, which, of course, is also Of course, good sign of continuation. And therefore, the pool will also Join 1 pool member will join ForeSeeA's Board of Directors. Having a short, let's say, look on both companies at the next chart. I think HELLA is well known as and the same is true for ForeSeea.
HELLA was 6,500,000,000 sales, More than 36,000 people in 35 countries. For ASEA, much larger At the top 10 automotive suppliers worldwide with €16,500,000,000 sales, 250 locations worldwide and more than 114,000 people. When you when the integration process has been finished and the integration is finished, A new group with more than 150,000 people and €23,000,000,000 sales will occur with more than 3.75 production and R and D and admin sites. And as I said, the 7th largest Auto Supplier Worldwide will be formed. Also result of our negotiation with regard to the business combination agreement is that from our perspective, we can continue Our profitable growth strategy, this is true for our electrification initiatives with our battery management systems, our DCDC converters and many others.
The same is true for our autonomous driving activities with a focus on radar And software items, also our lighting activities With the focus on, of course, headlamp technology on the one hand, but also design elements in the tail in Interior Lighting and Car Body can be continued. And we also discussed this, our special focus now on our growth activities our special growth activities in China, from my perspective, can be continued and implemented. Of course, also other, let's say, guiding Principles like our strict cost control approach, our digitization and automation approach was at first At some glance, well perceived by Florecia. And here, I think also continuity is very likely. In addition to that, from the perspective of the HELLA Management Board, we will benefit From the combination of both companies, one important area will be electrification.
We can combine our initiatives I mentioned before, For example, with the fuel sale activities of ForeSeea, also when I look at Driver Assistance Systems, the Activities at Faurecia Clarion Electronics and our activities in the radio area fit Very well together. And I think ForeSeea already announced that they intend to merge There are electronic activities together with the Heller activities to 1 business group, which then will be led here from Lippischad. And we see good opportunities to together continue the growth path We have defined and even could grow even stronger in the years to come. I can imagine and I believe that one important focus of the activities of the Combined group will also be in interior. Here, on the one hand, ForeSeea is a market leader for interior parts like panels, Cockpit consoles, seats on the one hand and our experience and our products in interior lighting and also our sensors for interior fits very well together.
And together, we really can offer a quite convincing range of subsystems and products in this area. Also, Hela, of course, will benefit From the very good customer access of ForeSeea in Asia, here, I think the network ForeSeea network in Japan could be of a special importance. And when I look at our aftermarket and special application, for this year in 10th. And this is also, let's say, described in the business combination agreement to build up a new business division called Life Cycle Management, where we combine our, for example, aftermarket activities. We where we combine our, for example, aftermarket activities with the activities of Foresea in the area of repair of repairing products and also with regard of the activities in sustainable materials to form this life cycle group, which from my perspective There's a huge growth potential in the past when I look at the importance of ESG and sustainable management in the future.
Both companies, I think this It's true for Resia and Pella. We'll continue to benefit from the general Market trends, we very often discuss them here in this round, electrification, automated driving, connectivity And so also individualization, the HELLA portfolio fits very well to these trends is supported with regards to the growth performance of these trends. And the same is true from our perspective for the ForeSeea portfolio, naming, for example, their fuel cell activities with regard to ADAS, Parking Systems and others, their cockpit activities, of course, cockpit of the future for connectivity and digitalization is of high is important for the market. And when I look at individualization, also many Foresea products and also our lighting products Fits well into this area. So from a product portfolio, I think a good combination and a very strong portfolio when I look at the link between the products and the general market trends.
To sum it up, I think both groups are a very good fit with regard to their product portfolio. We can benefit From each other, we can support each other with regards to the profitable growth aspirations we both have. There's also an agreement that with regards to the HELLA Business Division that we can continue to invest consistently into the development of our technologies to secure our positioning with regards to our market coverage on the one hand and our technology leadership on the Other hand, yes, an integration process will now be defined. I already mentioned the integration committee, the Monitoring Committee. We will build up different work streams to detail the integration process, which from my perspective, When I look at the business division, it should not be so complicated because the logic how the business divisions are steered are very similar in both companies and should be possible.
Lifshadt, and of course, this is very important for the LR people, We'll remain a central location of the joint group. These 3 business divisions I mentioned, Lighting, Electronics and Life Cycle Value Management will be the headquarters of this group will be located in Lip And I already also mentioned that the HELLA pool shareholders will become a relevant shareholder of ForeSeea. Of course, we also had intensive discussions With for this year, with regards to the financial concept, Mr. Sheva Bartok personally had a deep view into it. And we think that the whole financial structure is very sound and reliable.
What are
the next steps? The decision was made at the 14th August. The publication of the offer documents, we Expect at the end of September and then the start of the acceptance period will occur. The end of this phase, we assume, will be beginning of November. Of course, these dates are estimations.
And yes, a rough estimation as a rough estimation, we think the closing will for early 2022, but you all know this is very difficult to predict. Yes, having said this, now Mr. Shekharvard and myself are looking forward to answer your questions.
We will now begin our question and answer session. Please limit your questions
you.
You. And the first question is coming from Jaig van Adler at Citigroup. Please go ahead.
Thank you. Gabriel Hadlett from Citi. And thank you very much for the presentation. I'm finding time for questions this morning. I have three questions, please.
The first is whether you could please confirm if there will need to be a domination agreement in order to generate the announced cost of revenue synergy. My second question is on antitrust. Could you just confirm whether the founding family sale is contingent on Foresi receiving all the antitrust approvals? And also which jurisdiction antitrust approvals would be required in? And then my third question is on R and D.
When I look at both of your businesses, one of the most notable differences in how the 2 companies operate is this approach to R and D with teles around 10% of sales on gross R and D compared to about 6% for rest of the year. Do you expect this to change as a result of the transaction? And could you confirm how much R and D savings is contributing to the synergy target. Thank you.
Perhaps starting with your last question with regard to R and D, of course, I now cannot confirm a special rate. We will discuss this with our colleagues from Faurecia With regard to special synergies in R and D, of course, here also we have to discuss this. I cannot comment on that. But Allow me to say overall, we have an agreement with ForeSeea that our Technology leadership strategy will go on and that we will also continue to significantly invest into R and D in the years to come because we think and I think this is also true for ASEA that this is one Important element of the success story of HELLA in the last Yes. But of course, we have to look how the discussions are going on and whether there will be and How much of synergies can be realized?
With regard to the domination agreement, I hand over to Mr. Sheffer Barthold.
At least we can say that there's no decision taken as of today, but It has been prediscussed that if it comes to the synergies, no domination agreement is necessary to realize Let's discuss the synergies at the end. The mentioned integration committee will be the Dominant premium, let's say, to discuss how to work going forward and to, let's say, work on the integration Concept, yes. And I've not really understood Your second question, if it comes to antitrust. Can you repeat?
It was just whether The family sale is contingent on antitrust approvals being reached, so the timeline of the sale being done before or after antitrust approvals. And also if you have any insights into where antitrust approvals are required. So do you need a specific one in China, for example?
Yes. At least preparations have been done. And the expectation is that there is no, Let's say, critical topic or country where we see any issues as of today, for sure. Let's say, it is there is an agreement that antitrust We need each acceptance in the different countries. So that is, let's say, the mentioned time line and uncertainty Mr.
Breinbach mentioned, if it comes to the expectation on closing early 2022. But as I said, we do from all pre examinations, which have been done by the lawyers, there is no A problem which we would foresee.
Brilliant. Thank you, Jose.
The next question is coming from Akshat Kecka at JPMorgan. Please go ahead.
Thank you. Good morning. Akshat at JPMorgan. 2 From my side, please. The first one is on growth and strategic direction for HELLA.
Thank you for the presentation this morning. I think you covered a lot of the topics. I just want to come back on that in terms of what are the biggest opportunities for HELLA coming out of this Transaction. Operational synergies when it comes to ADAS are very understandable. I just want How you're thinking about energy management and electrification?
Does this combination allow you to accelerate into a high voltage product portfolio? The second question is on the cost synergies. Obviously, both companies are very high quality in terms of how they've been run over the last few years. What is the low hanging fruit in terms of cost efficiencies and synergies? Is procurement a big part of that Rajee, Tariq, those are the first two questions, please.
Thank you.
I think starting with the second one, course, the integration committee has to work this out. And from our side, we will not now comment on synergies. But of course, we see very attractive synergies, especially in the area of purchasing from our perspective, but we have to discuss this with the ForeSee, our colleagues. Therefore, we today will not Purchasing will be a very important one. With regard to our growth perspectives, ADAS, you mentioned with regard to electrification, I think the access to Japanese customers Could here create additional momentum from our side.
And it could also be that when we have to offer a portfolio of different technologies, electrification combined with fuel cell and to our customers, This could also be additional add on Farcea can bring to the HELLA growth rate. The same is true for components. You are using for both BEVs and Fuel cell cars or vehicles, here I also see, let's say, an additional Possible way to accelerate our growth. And of course, from my perspective, not most attractive, but very attractive growth area is a whole area of interior. Here, I A boost for our interior lighting and the same should be true for parts and components for ForeSeea when we are offering the right Integrated subsystems and parts and components, we already started this with our open cooperation.
But of course, here, When we really combine the forces, much more is possible.
Thank you. Just one quick follow-up on the domination agreement as well. You mentioned that it is not necessary to realize, discuss synergies. But Can you talk about cash pulling? Can you optimize tax and cash without a domination agreement?
Thank you.
Yes, That is possible. So you do not need a domination agreement at the end to do cash pool. So at least in the also in the pre discussions we had, there is for sure in the overall, Let's say, optimization and takeout options, we would then have Also a discussion ongoing how then to optimize the financing going forward. So as you know, we There are also change of control clauses in our financial agreements. We will have to See how they would be used, especially on the bonds.
As you know, we have quite attractive terms. So we will try also, let's say, to optimize This in a way together with ForeSee that we have done the best possible outcome out of it. But again, back to also your original question, cash
The next question is coming from Giulio Pescatara at Exane. Please go ahead.
So it is my understanding that you had several offers on the plate. So what made you choose Faracious? So what was the thinking process And the second question is, have you discussed any potential business divestitures with Faurecia yet to maybe accelerate the deleveraging process? And then the third and last one on ADAS. So you're basically combining 2 businesses with pretty strong positions in low speed ADAS.
But When it comes to higher level, more sophisticated systems, do you see an opportunity after the merger is complete to redirect investments in this field?
Starting with the selection of offers, this was not the task of the head of management because this was, It's a clear decision from the shareholder family. We did not, let's say, Assess this was the clear responsibility of the shareholder families, family, the pool and the leadership of the pool. With regard to divestments, nothing is discussed so far with regard to divestments with Faurecia. And with regard to ADAS, as you said, we are quite strong together in the area of low speed ADAS. Here also, of course, the strategic discussions with Horacea are at the starting point.
But I can imagine that The HELLA strategy to step by step integrate into the midrange area can be continued, doing special investments for long ADAS Systems, I have an opinion, but we have to discuss this with ForeSeea. Therefore, as I said, this is currently at a starting point of this discussion.
Okay. Thank you.
The next question comes from Michael Rabe at Kepler Cheuvreux. Please go ahead.
Yes. Hi. Good morning, everyone. Mike Rauch, Kepler Cheuvreux. If I got that right, you basically just stated a few You don't think Faurecia needs to strike a domination agreement to have access to your cash pool and free If that's the case, could you please explain the background?
Because the angle I'm coming from Is that I believe typically, that was my understanding, you basically need a 3 quarters majority at the AGM to impose a profit transfer and Domination agreement on a company. So which regulation is it? Is it perhaps regulated to the pooling agreement of the pool shareholders, I. E. The family?
Which regulation is it that makes you think Faurecia does not need to strike a profit transfer and domination agreement, please?
We were talking about the cash pool. For a cash pool at the end, you don't need Domination agreement. And also, as you said, for it's different It's easier, let's say, if you have a domination agreement and a profit transfer agreement. But you don't need it to have a cash At the end, for a cash pool, for sure, we need to make sure that at the end, there are some, Let's say, right on Hela's side, to make sure Let's say, the terms we have are at arms length principles and that at least sufficient securities are given To Hela. But on cash pooling, it's not a necessary condition as said again to have a domination agreement.
All right.
And how about profit transfer?
Profit transfer is different because there at the end, It comes to the point, 1st of all, if you look at pure, let's From an accounting principle view, with the, let's say, control of the company, And this is given with the 60% share transfer, you can, let's say, fully The numbers and with that, at least you have then the Sales and profits within your accounts. So that's one. But At least as long as Heller is then stock listed and Mr. Breidenbach mentioned that the corporate bodies will stay Also after closing in place and as long as the stock listing is there, for sure then the, I would say normal game rules are still given so that they can only be, let's say, A dividend distribution as it is also now in place. So there as long as this is not given, this stays in
All right. Thank you. Good luck. Thanks.
The next question has come from Sanjay Paghwani at Bank of America. Please go ahead.
Hi. Thank you very much for taking my question as well. This is Sanjay Padhwani from Bank of America. My first one is as a follow-up to Gabriel's question, maybe I missed this one. Could you maybe clarify which Countries or jurisdictions, you would need the antitrust approval?
That is my first question.
I don't have because it's a long list Where I cannot now, I would say, because I don't have all different countries, I cannot tell them fully. So there is a long list of countries where we need this As I said, the pre examinations of the lawyers The only topic we would see as of today that there are for sure some countries Where the process takes longer or there is a higher uncertainty about the duration of the process.
And which are those countries? Sorry? And which are those countries which you anticipate things like There's a
long list of countries. So I cannot tell you by heart now all the different countries. But for sure, as you know, being both are global companies active in more than 35 countries overall. So it's the well known companies countries, But also smaller countries going down to Africa, but also Asia, Middle East, so it's across the world, you can say.
Thank you. That is very helpful. And my second question is on the synergies. I understand you cannot provide much details on that of now, the cost synergies. But can you please confirm, this is excluding the already €140,000,000 cost savings you are targeting for HELLA In the midterm?
Yes. Because it's solely based on our business plan.
Sure. Thank you for confirming that. And my last question is, maybe if you could provide some color on the rationale, The deal is structured as a combination of cash and stock for the family. And for the minorities, this is only cash. So is there a possibility that minorities are offered shares instead of cash as well?
From my perspective, this is not planned. It's a pure cash transaction.
The next question is coming from Dean Daniel, I'm sorry, From JPMorgan, your line is now open.
Good morning, gentlemen. Thank you for providing for questions. The first question is just can you confirm whether the agreement between Croatia and the family pool, is that irrevocable, meaning If there are other interested parties, then that the family could not accept a counter proposal If that ever came about. And the second question is simply whether the As part of the offer process, whether there'll be any conditions relating to market circumstances. For example, if automotive Indexes fell a certain level then that may provide the an exit for the offer process by Croatia?
We are not aware of that, but I think you have to ask us here because we do not so far know the details of the SPA.
Okay. And in terms of the tender offer conditions, Will there be a market condition included?
We don't know.
Okay. All right. Thank you.
The next question is coming from Christoph Laskari at Deutsche Bank. Please go ahead.
Hi, good morning. Thank you for taking my question. Not a lot left. Essentially, on Your partnerships and joint ventures, do you expect the combination of Forrester and Helane to have any impact on the joint ventures and partnerships to a negative degree that some might reconsider? Or would you expect everything to remain in place?
And then Also a bit linked to the combination and change in the company. Do you see a risk of a Brain drain for key functions or any key personnel, especially in the R and D field, which might be at risk from
the combination? Thank you.
With regard to the joint venture strategy overall, I think So as you and Hela have followed in the past a very similar approach. So this is kind of open corporations and fixed joint ventures. So I think the general thinking is the same. And therefore, I expect that also the combined group Follow a very similar approach Hemela has done in the past. But of course, let's see.
But I'm quite convinced that this will be The case now, of course, we have to check joint venture by joint venture, whether there are concerns also at our Venture Partners. This is currently open, but of course, we will do this. What was your second question? Yes, yes, yes. Of course, Always in these kind of situations, it's very important that we convince our people about The logic, the rationale of this transaction and due to the fact that we see Many, many advantages of this combined group compared to the stand alone scenario of HELLA.
We are quite optimistic that we convince all the hell out people and especially also our high performers to stay with us and to continue to fight for the company. But of course, we have to Now set a special focus on discussions, on communication, on explaining. And Of course, at day 1, step by step, we have to show that things are moving as agreed and expected. But assuming a very stringent and clear and transparent Post merger and process, I'm yes, as I said, very optimistic that the motivation and that the conviction that this is really a good approach will be dominant and will lead to even higher motivation of the HELLA
Thank you.
There seem to be no further questions. For closing remarks, I get back to the speakers.
Yes, from the side of Mr. Schafer Wattel and from my side, thank you very much for taking the time for all your questions. And yes, I think we will have A call in 3 days when we publish our financial figures. We really appreciate then, of course, also your participation, and we look forward to this meeting. All the best.
Bye.