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Aptiv (APTV) to Benefit From gabocom Buyout: Here's How

Zacks Equity Research

Aptiv PLC APTV recently announced that it has inked a deal to acquire gabo Systemtechnik GmbH ("gabocom") for around $310 million from Bregal Unternehmerkapital.

gabocom is a German-based provider of highly-engineered, cable management and protection solutions for the telecommunications industry. The company generates around $100 million in revenues every year.

Subject to regulatory approval and other customary closing conditions, the deal is expected to close by year end.

Deal Benefits

The deal closure will see the joining of gabocom into HellermannTyton, an unit of Aptiv's Signal and Power Solutions segment The segment designs, manufactures and assembles vehicle’s electrical architecture, including engineered component products, wiring assemblies and harnesses, connectors, cable management, electrical centers, and hybrid high voltage and safety distribution systems.

gabocom should enhance Aptiv's cable management portfolio and strengthen its position in the telecommunications market. The acquisition is expected to be accretive to the company’s 2020 EPS.

Kevin Clark, president and CEO at Aptiv, stated, "gabocom is a strong strategic fit for Aptiv and highly complementary to our HellermannTyton business." 

To Conclude

We believe Aptiv’s acquisition strategy, which helps it broaden its product portfolio and market share, gives it an edge over competitors like Lear Corporation LEA, Sumitomo Corporation SSUMY and TE Connectivity, Ltd TEL.

The company intends to continue making investments aimed at organic as well as inorganic growth. Investments are an integral part of Aptiv’s productivity initiatives, which should help it grow on its operating margin, going ahead.

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