AUTOMOTIVEIQ - Amherst Partners...May 11, 2018 -Detroit, Michigan-based Drake Automotive Group Inc., a platform company of private equity group Huron Capital, acquired Boulder Colorado-based

Summary of Automotive Industry M&A and Capital Markets Activity

Amhers tPar tners .comSecond Quarter 2018

Industry Insights for Q2 2018Auto supplier M&A activity continued at a robust pace in the first half of 2018, although down modestly in the number of deals closed versus the same period in 2017. This is a contin-uation of a trend we saw during the first quarter of the year. Tailwinds supporting M&A activity include the following:• Supportive economic underpinnings – low unem-

ployment, rising housing starts, relatively low in-terest rates (although headed up), consumer con-fidence tracking at historically high levels, and rising levels of disposable income per capita

• Tax reform – passage of The Tax Cut and Jobs Act • Demand/supply imbalance – demand for high-

quality acquisition targets significantly exceeds the supply of those assets available to be ac-quired, hence ever-escalating valuation multiples

Headwinds to M&A activity include: .

• Declining vehicle sales volumes – hav-ing peaked in 2016 at approximately 17.5 mil-lion units, sales of light vehicles in the U.S. are expected to decline steadily through 2021

• Shifting macro factors – escalating gas prices, tightening monetary policy (i.e., rising rates), rising raw material costs, and shifts toward more restrictive trade policies (including tariffs)

Against this backdrop of shifting forces impacting auto suppliers, there are a number of prevalent trends which

are driving automotive M&A activity and will continue to do so into the foreseeable future. These include:• Technology advancements – the growing emphasis on

automated, connected, electric and sharing (ACES) ve-hicle technologies is increasingly driving M&A activity

• Globalization and vehicle lightweighting trends – pressure by OEMs for suppliers to be able to effi-ciently support global vehicle platforms produced in multiple countries; likewise, regulatory policies man-dating escalating fuel efficiency targets drive suppliers’ search for technologies that enable lighter vehicles

• Evolving product portfolios produce more spin-offs – as suppliers shift resources to support product portfolios more reflective of ACES technologies, these same companies are spining-off business units containing more traditional mechanical, non-core products

For the remainder of 2018, we believe we will see a con-tinuation of the healthy M&A momentum experienced in 2017 and through the first half of 2018. Well-capitalized suppliers and private equity buyers with deep pockets will seek advantageous competitive differentiation through acquisition strategies, all while being mindful of shifting economic and geopolitical forces beyond their control.

For more details visit:www.amherstpartners.com/services/automotive-industry.

IQAUTOMOTIVE

January 5, 2018 - Private equity group TowerBrook Capital Partners L.P. acquired Germany-based Bosal Automotive Carrier and Protection Systems GmbH. Bosal manufactures automotive accessories, trailer couplings for cars, vans, and light commercial vehicles, and automotive equipment, such as drive-linkage modules for original equipment manufacturers and suppliers and for the aftermarket in Europe. TowerBrook noted Bosal’s highly-experienced management team and potential for international growth and view Bosal as an attractve platform to accelerate technological innovation, partnerships, and acquisi-tions. The financial terms of the transaction were not disclosed.

February 6, 2018 - Private equity group Crestview Partners L.P. acquired Oklahoma City, Oklahoma-based ATC Drivetrain LLC. ATC is an independent remanufacturer of automotive drivetrain components, including transmissions, engines and related com-ponents, for in-warranty vehicles in the United States. Crestview cited ATC’s long-standing relationships with blue-chip automak-ers as a key driver for the acquisition. The financial terms of the transaction were not disclosed.

March 7, 2018 - Braintree, Massachusetts-based Altra Industrial Motion Corp. (NasdaqGS:AIMC) announced an agreement to acquire Everett, Washington-based Thomson Industries, Kollmorgen, Portescap and Jacobs Vehicle Systems. Thomson Industries, Kollmorgen, Portescap and Jacobs Vehicle Systems manufacture motion control solutions, miniature motors, and commercial vehicle retarding systems, and valve actuation technologies. Altra management noted that as a result of the transaction, Altra will expand its position across the technol-ogy spectrum, increase exposure to higher growth sectors, and expand its scale and global reach. The announced transaction value was $6.4 million, which implies a net income multiple of 6.8x.

March 9, 2018 - Maumee, Ohio-based Dana Incorporated (NYSE:DAN) acquired the driveline business of United Kingdom-based GKN Plc. The acquired business unit comprises automo-tive driveline systems, solutions, and off-highway powertrain businesses. Dana management cited eDrive technology port-folio and increased presence in China as key drivers for the acquisition. The announxrced transaction value was $6.24 bil-lion, which implies revenue and EBITDA multiples of 0.8x and 7.7x, respectively.

April 9, 2018 - Fort Collins, Colorado-based Woodward Aken GmbH acquired German-based L’Orange GmbH. L’Orange manufactures fuel injection systems for industrial diesel, heavy fuel oil, and dual-fuel engines. Woodward management cited L’Orange’s intellectual property portfolio, large installed base of industrial equipment, and highly complementary portfolio as key drivers for the acquisition. The announced transaction value was $862 million.

April 10, 2018 - Lake Forest, Illinois-based Tenneco Inc. (NYSE:TEN) announced an agreement to acquire Southfield, Michigan-based Federal-Mogul LLC, a subsidiary of Icahn Enterprises. Federal Mogul operates two independent divi-

Recent Deal Activity Q1/Q2 2018

Amhers tPar tners .com

AUTOMOTIVEIQ

Enterprises. Federal Mogul operates two independent divisions: 1) Powertrain, which manufactures powertrain components for OEMs and 2) Motorparts, which distributes a broad portfolio of products under many of the most recognized brands in the global vehcile aftermarket. Tenneco management cited Federal-Mogul’s complementary brands, products, and capabilties and the strategic fit with its leading global position in ride control and exhaust prodcts as key drivers for the acquisition. The announced transaction value was $5.4 billion, which implies revenue and EBITDA multiples of 0.7x and 7.2x, respectively.

May 4, 2018 - Private equity group Hidden Harbor Capital Partners LLC acquired Fort Smith Arkansas-based Cloyes Gear & Products Inc., a subsidiary of American Axle & Manufacturing Inc. Cloyes manufactures timing drive systems and components for replacement applications in the automotive aftermarket and high performance racing segment. Hidden Harbor management cited Cloyes’ premier brand in timing systems and related com-ponents and a strategy for executing on geographic and prod-uct expansion as key drivers for the acquisition. The announced transaction value was $50 million.

May 11, 2018 - Detroit, Michigan-based Drake Automotive Group Inc., a platform company of private equity group Huron Capital, acquired Boulder Colorado-based Proforged LLC. Proforged manufactures chassis parts for the automotive mar-ket. Drake management cited Proforged’s strong presence in the wear-and-tear replacement market and complementary product capabilities as key drivers for the acquisition. The finan-cial terms of the transaction were not disclosed.

May 22, 2018 - Germany-based Grammer AG (DB:GMM) announced an agreement to acquire Toledo, Ohio-based Toledo Molding & Die Inc. Toledo Molding is an integrated supplier of HVAC, powertrain, and interior/exterior components and sub-systems. Grammer management noted the transaction more than doubles it presence in North America and balances its international footprint. The announced transaction value was $271 million which implies a revenue multiple of 0.9x.

June 4, 2018 – Lakewood, Colorado-based Wheel Pros Holdings LLC acquired North Ridgeville Corners, Ohio-based Amcor Industries, Inc., doing business as Gorilla Automotive Products. Amcor manufactures branded lug nuts, wheel locks, and other automotive accessories to retailers. Wheel Pro man-agement cited Amcor’s brand leadership in the lug nuts and wheel locks aftermarket. The financial terms of the transaction were not disclosed.

June 22, 2018 – Maumee, Ohio-based Dana Incorporated (NYSE:DAN) acquired Canada-based TM4 Inc. TM4 engages in the design, production, and supply of customized electric drive-trains for electric and hybrid vehicle manufacturers, and genera-tors for wind turbine and gen-set manufacturers. Dana manage-ment cited increased presence in China as a key driver for the transaction. The announced transaction value was $124 million.

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Amherst Partners' Supplier Index S&P 500 Stock Index

Source: Capital IQ. Left Axis: Index Value


AUTOMOTIVEIQAutomotive Supplier Trading Multiples

(1) EV (“Enterprise Value”) is defined as market capitalization plus net debt, preferred equity and minority interest.(2) Median and mean values exclude all non-meaningful values.

Amherst Partners Automotive Supplier Index

Source: Capital IQ

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U.S. Light Vehicle Sales

Source: IHS

Source: Capital IQ (as of June 30, 2018)

($ in millions) 06/30/18 Qtrly Price Market Total LTM Gross EBITDA Net Debt/ Enterprise Value/LTMCompany Stock Price Change Cap. EV(1) Revenue EBITDA Margin Margin EBITDA Revenue EBITDA

American Axle & Manufacturing 18.39$ 8% 2,022$ 5,701$ 7,075$ 1,186$ 18% 17% 3.1x 0.8x 4.8xBorgWarner Inc. 46.74 (9%) 9,902$ 11,923$ 10,177$ 1,689$ 22% 17% 1.1x 1.2x 7.1xCooper Tire & Rubber Co. 27.78 (21%) 1,403$ 1,591$ 2,813$ 392$ 17% 14% 0.3x 0.6x 4.1xDana Holding Corporation 21.64 (32%) 3,164$ 4,825$ 7,646$ 828$ 15% 11% 1.8x 0.6x 5.8xGentex Corp. 25.06 20% 6,866$ 6,239$ 1,807$ 620$ 38% 34% NM 3.5x 10.1xGentherm Incorporated 39.08 23% 1,396$ 1,435$ 998$ 132$ 31% 13% 0.3x 1.4x 10.9xGoodyear Tire & Rubber Co. 24.98 (23%) 6,003$ 11,650$ 15,508$ 2,051$ 23% 13% 2.6x 0.8x 5.7xJohnson Controls Inc. 34.94 (8%) 31,830$ 44,901$ 30,729$ 4,695$ 30% 15% 2.5x 1.5x 9.6xLear Corp. 201.79 14% 13,301$ 14,320$ 21,202$ 2,196$ 11% 10% 0.3x 0.7x 6.5xMeritor, Inc. 21.69 (8%) 1,867$ 2,604$ 3,811$ 391$ 16% 10% 1.8x 0.7x 6.7xModine Manufacturing Co. 18.98 (6%) 962$ 1,405$ 2,103$ 192$ 17% 9% 2.3x 0.7x 7.3xShiloh Industries Inc. 9.22 12% 217$ 456$ 1,066$ 71$ 11% 7% 3.4x 0.4x 6.4xStandard Motor Products Inc. 50.47 12% 1,114$ 1,184$ 1,096$ 138$ 29% 13% 0.5x 1.1x 8.6xStoneridge Inc. 34.98 53% 913$ 978$ 846$ 98$ 30% 12% 0.7x 1.2x 10.0xSuperior Industries International 19.80 33% 498$ 1,368$ 1,320$ 159$ 10% 12% 4.2x 1.0x 8.6xTenneco Inc. 46.78 (20%) 2,395$ 3,701$ 9,556$ 726$ 16% 8% 1.6x 0.4x 5.1xTower International, Inc. 34.05 11% 700$ 1,015$ 2,054$ 208$ 12% 10% 1.5x 0.5x 4.9x

Median(2) 17% 12% 1.7x 0.8x 6.7xMean 20% 13% 1.8x 1.0x 7.2x


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CHART TITLE: U.S. Total Vehicle Sales

Source: Ward's Automotive Left Axis: Total Unis Sold (in millions)

CHART TITLE: U.S. Total Vehicle Sales

Source: Ward's Automotive Left Axis: Total Unis Sold (in millions)

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Chart Title: U.S. Supplier Index Median Net Debt/EBITDA Source: Capital IQ.


AUTOMOTIVEIQGlobal OEM Aggregate Sales and EBITDA Margin

Supplier Index - Median Net Debt/LTM EBITDA

Source: Capital IQ

Supplier Index - Median Enterprise Value/LTM EBITDA

Source: Capital IQ

Global Automotive M&A Activity

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Sources: Capital IQ, OneSource, SEC filings, company information and Amherst research.

Search Criteria: (1) Automobiles and Components (primary); (2) Mergers or acquisitions for majority control; (3) Transactions announced date (Including bids and letters of intent)

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Chart Title: U.S. Supplier Index Median Enterprise Value/LTM EBITDA Source: Capital IQ.

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$1,503.4 $1,619.2 $1,766.2 $1,797.4 $1,703.2 $1,798.2 $1,724.2

$2,030.6 $1,864.3 $2,044.9

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Agg. Asian Sales Agg. European Sales Agg. North American Sales Total OEM EBITDA Margin

Our Services

• Merger & Acquisition Advisory• Capital Raising• Restructuring Advisory• Management Consulting

As a partner in IMAP, Amherst maintains a well-established net-work of international offices in over 35 countries. In 2017, IMAP advisers completed 191 global transactions, worth over $12 bil-lion. Through our IMAP partners, Amherst benefits by having sea-soned deal professionals “on the ground” across the globe, with firsthand knowledge of the local cultural and business environment.

AUTOMOTIVEIQ© Copyright 2018 Amherst Partners, LLC All Rights Reserved.

Amherst Partners LLC is a bou-tique, independent Investment Banking, Restructuring Advisory, and Management Consulting firm. Securities transactions are offered through Amherst Partners’ wholly-owned subsidiary, One Amherst Partners LLC, a regis-tered broker-dealer and member of FINRA (www.finra.org) and SIPC ( w w w. s i p c . o r g ) . . This report is published solely for informational purposes and is not to be construed as render-ing legal, accounting or invest-ment advice or as a solicitation or an offer to buy or sell securities. Although information contained in this report has been obtained from and is based on sources that Amherst Partners LLC believes to be reliable, it is not guaranteed as being accu-rate. Past performance is not an indication of future results.

For more information:www.amherstpartners.com

About AmherstAmherst Partners’ track record spans over 20 years of investment banking excellence, using senior level advisors to create unique solutions for middle-market transactions. .

Contact Us

Don Luciani, Partner Head of Automotive Group248.633.2139

[email protected]

Chas Chandler, Partner 248.633.2140 [email protected]

Scott Eisenberg, Partner 248.633.2150 [email protected]

Sheldon Stone, Partner 248.633.2135 [email protected]

Thomas McCabe, Managing Director 847.651.6565 [email protected]

James Morden, Managing Director 248.633.2051 [email protected]

John W. Patterson, Managing Director 908.403.2135 [email protected]

Brian Phillips, Managing Director 248.633.2131 [email protected]

Matthew Feldman, Director 248.633.2060 [email protected]

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AUTOMOTIVEIQ - Amherst Partners...May 11, 2018 -Detroit, Michigan-based Drake Automotive Group Inc., a platform company of private equity group Huron Capital, acquired Boulder Colorado-based