Dear ladies and gentlemen, good morning to all of you. Thanks a lot for dialing in. This is Rolf Breidenbach speaking. Welcome to this extraordinary investor call following the announcement on Saturday that the HELLA owner family has decided to sell its 60% stake in HELLA to the French automotive supplier, Faurecia. Also, as always, of course, a very warm welcome from my colleague, Mr. Schäferbarthold, 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 Purchase Agreement. At the same time, the company signed a Business Combination Agreement with Faurecia. As part of this transaction, Faurecia will acquire the 60% in HELLA from the Pool shareholders. Furthermore, Faurecia has announced a voluntary public tender offer to acquire the remaining HELLA shares.
The offer price amounts to EUR 60 per share, assuming a dividend of EUR 0.96 per share. The gross offer price amounts, therefore, to EUR 60.96 per share. This corresponds to a premium of 33% on the closing price of HELLA on the 26th of April 2021, which represents the last share price unaffected from the market rumors. The value of the transaction, I think this is well known, is at EUR 6.8 billion. 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 Financial Supervisory Authority. The HELLA management, the shareholders committee, and the supervisory board welcome the transaction. From a strategic standpoint, the combination of Faurecia and HELLA, from our perspective, makes a lot of sense. What are the key aspects?
With this transaction, a new global champion in the automotive industry will be created. HELLA, 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 companies. The general thinking on how both companies are driving their business, how they think about strategic principles, from our perspective is very similar, which of course will make the integration process much easier. Both companies are striving for market and technology leadership, and also believe in strong business divisions with a clear P&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.
It was also agreed that three of the six business groups will be headquartered in Lippstadt, and will be led from the Lippstadt 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. In addition to that, a monitoring committee consisting of the Chairman of Faurecia, the CEO of Faurecia, the CEO of HELLA, and I think an important member of the shareholder Pool will then also monitor this whole integration process as a last, let's say, decision body. The Pool shareholders of HELLA will become a relevant shareholder for Faurecia, which of course is also a good sign of continuation. Therefore, one Pool member will join Faurecia's board of directors.
Having a short look on both companies at the next chart. I think HELLA is well known as, and the same is true for Faurecia. HELLA with EUR 6.5 billion sales, more than 36,000 people in 35 countries. Faurecia, much larger, at the top 10 automotive suppliers worldwide with EUR 16.5 billion sales, 250 locations worldwide, and more than 114,000 people. When the integration process has been finished and the integration is finished, a new group with more than 150,000 people and EUR 23 billion sales will occur with more than 375 production and R&D and admin sites.
As I said, the seventh largest auto supplier worldwide will be formed. Also, a 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 DC/DC converters and many others.
The same is true for our autonomous driving activities with the focus on radar and software items. Our Lighting activities with the focus on, of course, headlamp technology on the one hand, but also design elements in the tail lamp area, new applications in interior lighting and car body can be continued. We also discussed this, our special focus now on 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 digitalization and automation approach was at first glance well-perceived by Faurecia, 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 cell activities of Faurecia. Also when I look at driver assistance systems, the activities at Faurecia Clarion Electronics, and our activities in the radar area fit very well together. I think Faurecia already announced that they intend to merge their electronic activities together with the HELLA activities to one business group, which then will be led here from Lippstadt. 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.
On the one hand, Faurecia 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. Together we really can offer a quite convincing range of subsystems and products in this area. Also, HELLA, of course, will benefit from the very good customer access of Faurecia in Asia. I think the Faurecia network in Japan could be of special importance.
When I look at our Aftermarket and Special Application, Faurecia intends, and this is also, let's say, described in the Business Combination Agreement to build up a new business division called Lifec ycle Management, where we combine our, for example, Aftermarket activities with the activities of Faurecia in the area of repairing products and also with regard of the activities in sustainable materials to form this Life cycle group, which from my perspective, has 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 is true for Faurecia and HELLA will continue to benefit from the general market trends. We very often discuss them here in this round, electrification, automated driving, connectivity, and also individualization. The HELLA portfolio fits very well to these trends.
It's supported with regard to the growth performance of these trends, and the same is true from our perspective for the Faurecia 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 highest importance for the market. When I look at individualization, also many Faurecia products and also our lighting products fit well into this area. 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 regard to the profitable growth aspirations we both have.
There's also an agreement that with regard 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. 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, should not be so complicated because the logic how the business divisions are steered are very similar in both companies, and to adapt this should be possible. Lippstadt, and of course, this is very important for the HELLA people, will remain a central location of the joint group.
These three business divisions I mentioned, Lighting, Electronics, and Life cycle Value Management, the headquarter of this group will be located in Lippstadt, and I already also mentioned that the HELLA Pool shareholders will become a relevant shareholder of Faurecia. We also had intensive discussions with Faurecia with regard to the financial concept. Mr. Schäferbarthold 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 of August. The publication of the offer documents, we expect at the end of September, and then the start of the acceptance periods will occur. The end of this phase, we assume, will be beginning of November. These dates are estimations.
As a rough estimation, we think the closing will occur early 2022, but you all know this is very difficult to predict. Having said this, now Mr. Schäferbarthold and myself are looking forward to answer your questions.
The first question is coming from Gabriel A dler at Citigroup. Please go ahead.
Thank you. Gabriel Adler from Citi. Thank you very much for the presentation and finding time for questions this morning. I have three questions, please. My first is whether you could please confirm if there will need to be a domination agreement in order to generate the announced cost and revenue synergy. My second question is on antitrust. Could you just confirm whether the founding family sale is contingent on Faurecia receiving all the antitrust approvals, and also which jurisdiction antitrust approvals would be required in? My third question is on R&D. When I look at both of your businesses, one of the most notable differences in how the two companies operate is this approach to R&D, with HELLA spending around 10% of sales on gross R&D compared to about 6% for Faurecia. Do you expect this to change as a result of the transaction?
Could you confirm how much R&D savings is contributing to the synergy targets? Thank you.
Perhaps starting with your last question with regard to R&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&D, of course, here also we have to discuss this. I cannot comment on that. Allow me to say overall, we have an agreement with Faurecia that our technology leadership strategy will go on, and that we will also continue to significantly invest into R&D In the years to come, because we think, and I think this is also true for Faurecia, that this is one important element of the success story of HELLA in the last years. 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. Schäferbarthold.
At least we can say that there's no decision taken as of today. It has been pre-discussed that if it comes to the synergies, no domination agreement is necessary to realize the discussed synergies. At the end, the mentioned integration committee will be the predominant gremium, let's say, to discuss how to work going forward and to, let's say, work on the integration concept. Yeah. I've not really understood your second question if it comes to.
Antitrust.
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 insight into where antitrust approvals are required. Do you need a specific one in China, for example?
Yeah. At least preparations have been done. 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, there is an agreement that antitrust needs to, or we need each acceptance in the different countries. That is, let's say, the mentioned timeline and uncertainty Mr. Breidenbach mentioned, if it comes to the expectation on closing early 2022. As I said, from all pre-examinations which have been done by the lawyers, there is no problem which we would foresee.
Brilliant. Thank you for your answer.
The next question is coming from Akshat Kacker at JP Morgan. Please go ahead.
Thank you. Good morning. Akshat Kacker at JPMorgan. Two 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 to understand 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 synergy target?
Those are the first two questions, please. Thank you.
I think starting with the second one, of course, the integration committee has to work this out, and from our side, we will not now comment on synergies. Of course, we see very attractive synergies, especially in the area of purchasing from our perspective. We have to discuss this with the Faurecia colleagues, therefore, we today will not be too specific on this topic. The integration committee will prepare this. I already mentioned these work streams, and I can imagine that 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 to our customers, this could also be additional add-on Faurecia 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. Of course, from my perspective, not most attractive, but very attractive growth area is the whole area of interior. Here, I expect a boost for our interior lighting, and the same should be true for parts and components for Faurecia 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 discussed synergies, but in terms of our cash pooling, can you optimize tax and cash without a domination agreement? Thank you.
Yes. That is possible. You do not need a domination agreement at the end to do cash pool. Also in the pre-discussions we had, there is for sure in the overall, let's say, optimization and take-out options we would then have also a discussion ongoing how then to optimize the financing going forward. As you know, 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, we will try also, let's say, to optimize this in a way together with Faurecia that we have then the best possible outcome out of it. Again, back to your original question, cash pooling is possible.
Thank you.
The next question is coming from Giulio Pescatore at Exane. Please go ahead.
Hi. Morning. Thanks for taking my question. It is my understanding that you had several offers on the plate. What made you choose Faurecia's? What was the thinking process there? The second question is, have you discussed any potential business divestitures with Faurecia yet to maybe accelerate the leveraging process? The third and last one on ADAS. You're basically combining two businesses with pretty strong positions in low-speed ADAS. 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 HELLA management because this was the, let's say, a clear decision from the shareholder family. We did not, let's say, assess this. This was the clear responsibility of the shareholder family and the Pool and the leadership of the Pool. With regard to divestments, nothing is discussed so far with regard to divestments with Faurecia. 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 Faurecia are at a starting point. I can imagine that the HELLA strategy to step by step integrate into the mid-range area can be continued doing special investments for long-range ADAS systems. I have an opinion, but we have to discuss this with Faurecia.
Therefore, as I said, this is currently at a starting point, this discussion.
Okay, thank you.
The next question coming from Michael Raab at Kepler Cheuvreux. Please go ahead.
Hi. Morning, everyone. Michael Raab, Kepler Cheuvreux. If I got that right, you basically just stated a few minutes ago, you don't think Faurecia needs to strike a domination agreement to have access to your cash pool and free cash flow. If that's the case, could you please explain the background? Because the angle I'm coming from is that I believe typically, or that was my understanding, you basically need a three-quarters majority at the AGM to impose a profit transfer and domination agreement on a company. 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 a domination agreement. Also, as you said, it's easier, let's say, if you have a domination agreement and a profit transfer agreement, you don't need it to have a cash pool. At the end, for a cash pool, for sure, we need to make sure that at the end, there are some, let's say, rights on HELLA's side, to make sure that, let's say, the terms we have are at arm's length principles and that at least sufficient securities are given to HELLA. On cash pooling, it's not a necessary condition, as said again, to have a domination agreement.
All right. How about profit transfer?
A profit transfer is different because there at the end, it comes to the point, first of all, if you look at pure, let's say, from an accounting principle view.
With the, let's say, control of the company, and this is a given with the 60% share transfer, you can, let's say, fully consolidate the numbers. With that, at least you have then the sales and profits within your accounts. That's one. At least as long as HELLA 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 are 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.
All right.
There, as long as this is not given, this stays in place.
All right. Thank you. Good luck.
Thanks.
The next question has come from Sanjay Bhagwani at Bank of America. Please go ahead.
Hi. Thank you very much for taking my question as well. This is Sanjay Bhagwani 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.
It's a long list where I cannot now, I would say, because I don't have all different countries, but I cannot tell them fully. There is a long list of countries.
Yeah.
Where we need this approval. As I said, the pre-examinations of the lawyers has not, let's say, shown any critical countries where at least we see problems. 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.
Which are those countries?
Sorry?
Which are those countries which you anticipate things?
There's a long list of countries. I cannot tell you by heart now.
No problem.
Different countries. For sure, as you know, being both are global companies active in more than 35 countries overall. It's the well-known countries, but also.
Yeah.
Smaller countries going down to Africa but also Asia, Middle East. It's across the world, you can say.
Thank you. That is very helpful. My second question is on the synergies. I understand you cannot provide much details on that as of now, the cost synergies, but can you please confirm this is excluding the already EUR 140 million cost savings you are targeting for HELLA in the midterm?
Yes.
Thank you.
Because it is solidly based on our business plan.
Sure. Thank you for confirming that. 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. 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.
Thank you. Very helpful.
The next question is coming from [Dean Daniel] . I'm sorry. From JP Morgan, 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 Faurecia and the family Pool, is that irrevocable? Meaning, if there are other interested parties, then the family could not accept a counter proposal if that ever came about. The second question is simply, whether 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 an exit for the offer process by Faurecia.
We are not aware of that, but I think you have to ask Faurecia because we do not so far know the details of the SPA.
Okay. 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 Laskawi 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 Faurecia and HELLA to have any impact on the joint ventures, and partnerships to a negative degree that some might reconsider? Would you expect everything to remain in place? Also 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&D field, which might be at risk from the combination? Thank you.
With regard to the joint venture strategy overall, I think Faurecia and HELLA have followed in the past a very similar approach. This is kind of open corporations and fixed joint ventures. I think the general thinking is the same, and therefore I expect that also the combined group follow a very similar approach HELLA has done in the past. Of course, let's see. I'm quite convinced that this will be the case. Of course, we have to check joint venture by joint venture, whether there are concerns also at our joint venture partners. This is currently open, but of course we will do this. What was your second question?
Yeah.
Yeah. 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. Due to the fact that we see many advantages of this combined group compared to the standalone scenario of HELLA, we are quite optimistic that we convince all the HELLA people and especially also our high performers to stay with us and to continue to fight for the company. Of course, we have to now set a special focus on discussions, on communication, on explaining. Of course, at day one, step by step, we have to show that things are moving as agreed and expected.
Assuming a very stringent and clear and transparent post-merger process, I'm, 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 people.
Thank you.
There seem to be no further questions. For closing remarks, I give back to the speakers.
Yeah. From the side of Mr. Schäferbarthold and from my side, thank you very much for taking the time for all your questions. I think we will have a call in three 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.