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Bloomberg
Samsung Electronics Co.’s $8 billion deal to buy Harman International Industries Inc. helped breathe some life into a few moribund auto stocks, especially Visteon Corp., as investors speculate that there could be a buying spree of companies that make technology for self-driving cars.
Visteon’s shares have surged about 16 percent this week after falling 39 percent this year through Nov. 11, the last trading day before Samsung announced the Harman deal. Much-larger Delphi Automotive Plc and Mobileye NV, which both make technologies for self-driving cars or driver infotainment, saw their stocks rise more than 2 percent the day of the deal.
The bet is that with Samsung plowing into auto technology, perhaps smartphone rival Apple or other tech giants could do the same. Even without a fresh round of dealmaking, the 28 percent premium paid by Samsung could get investors to rethink the depressed values of some auto parts makers, whose shares are collectively down 6 percent this year.
“We see this transaction as a watershed event with significance across the global sector that could re-rate the group,†Morgan Stanley analyst Adam Jonas wrote in a research report. “From this day forward, we believe investors looking at automotive and automotive supplier stocks will ask ‘what’s the next Samsung-Harman?’ and with good reason.”
The question is, which one? Visteon looks the most likely company to be bought for several reasons, said Richard Hilgert, a Morningstar Inc. analyst. With a market capitalization of $2.7 billion, it would be far easier for a buyer to swallow than Delphi, which is valued at about $18 billion, and Mobileye with a valuation of more than $8 billion.
The enthusiasm hasn’t just been limited to companies focused on automotive electronics. The Bloomberg Americas Auto Parts & Equipment index has risen 3.6 percent this week through Thursday, more than triple the Standard & Poor’s 500 stock index. Among more traditional parts-makers that gained this week are American Axle & Manufacturing Holdings, up about 14 percent, and seatmaker Adient Plc, which has gained about 15 percent.
A Mini Harman
Hilgert said Visteon is enticing because it’s some ways a smaller version of Harman: It makes technology in the dashboard like electronic displays, telematics and infotainment systems, and it it has expertise on interfaces between humans and machines. The company is also developing technology for self-driving cars.