Faurecia has emerged from the global financial crisis a bigger, stronger, more diverse supplier largely due to the swift and savvy moves it has made under the guidance of CEO Yann Delabriere.
Since the start of the year, the frugal French partsmaker has spent less than 35 million euros in cash to acquire two companies with a combined 2.8 billion euros ($3.5 billion) in sales.
In February, Faurecia paid in shares to take over Emcon Technologies. The no-cash deal, which was valued at 330 million euros, helped boost Faurecia's presence in the fast-growing clean-emissions sector.
A month later, Faurecia bought insolvent German plastic parts maker Plastal GmbH's industrial assets and customer contracts for 33 million euros. Prior to its collapse, Plastal Germany generated 408 million euros in sales to Audi, BMW, Daimler, Ford, Porsche and Volkswagen.
Delabriere, 60, said that a key added benefit of the Emcon deal is that it changed Faurecia's shareholder base. French automaker PSA/Peugeot-Citroen's stake was reduced to 57.4 percent from about 71 percent because the share deal gave Emcon's owners, One Equity Partners, a 17.3 percent stake in the company.
Delabriere said the addition of One Equity Partners, an investment fund of JPMorgan Chase & Co., "dramatically" changed the profile of the company for the financial markets.
"Our share, which was pretty illiquid before, is more liquid now with a lot of interest from financial investors," Delabriere said.
By being more diverse, Faurecia can use the market to help generate cash via financial instruments such as the successful convertible bond offering it launched in November 2009.
Speaking about the Plastal Germany deal, Delabriere said it helped deepened Faurecia's ties with German customers, which now account for 40 percent of the company's sales up from 34 percent in 2000 and 36 percent in 2005.
VW Group gave the French supplier an award for quickly taking control of Plastal's operations, which ensured there would be little disruption in deliveries. Faurecia provided the same quick and effective action when it took over two other smaller VW suppliers in Germany.
"I would say we have strengthened our relationship with our customers during the crisis," Delabriere said. "It has really strengthened the confidence on both sides."
Targeting more assets
Faurecia's pursuit of new assets sped up in June as it signed an agreement to purchase Plastal's Spanish arm, which includes plants in Barcelona, Tudela, Valencia and Valladolid that delivered 1.2 million bumpers and generated sales of 135 million euros in 2009. Terms have not been announced because the deal still needs to be approved by antitrust authorities.
The supplier also announced plans in June to buy a stake in Xuyang Group, one of the main suppliers to state-owned FAW Group, China's second-biggest carmaker, which has powerful joint ventures with Volkswagen AG, Toyota Motor Corp. and General Motors Co. Taking an 18.75 percent holding in Xuyang Group is part of Faurecia bid to boost annual sales in China to 1.7 billion euros by 2014 from 670 million euros last year.
Faurecia's wave of mergers and acquisitions is the result of a strategy developed as the crisis started to hit in late-2008. Delabriere said that by December 2008 the supplier had developed a plan to cut costs and secure financing. Since it already had launched an ambitious recovery plan in 2007, before the crisis, Delabriere said it was easier for Faurecia rapidly react to the fast-changing business environment.
Delabriere said the Faurecia board also decided in December 2008 that the supplier needed a plan to take advantage of opportunities that resulted from the crisis.
"We agreed that the supplier industry needed consolidation and it was the right time to do it," Delabriere said.
The plan was ready by the first quarter of 2009. Soon after that, the Emcon deal was being negotiated.
Delabriere has been Faurecia CEO since February 2007. He has been director at the supplier since 1996. Before taking the top job at the partsmaker, he was chief financial officer at Faurecia's majority shareholder PSA. He joined PSA in 1990 after holding finance and accounting posts in the French public and private sectors. Delabriere is a graduate of the Ecole Normale Superieure, the Ecole Nationale d'Administration (the French National School of Administration) and he has a post-graduate degree in mathematics.