() – Automotive parts maker Aptiv PLC said Tuesday it will buy software maker Wind River for $ 4.3 billion in cash to boost its offerings as the auto industry becomes more self-governing and increasing costs for electrification.
The deal, which is the largest since Aptiv split from Delphi Technologies in 2017, will also help Wind River take advantage of a major transition to automation thanks to its multi-industry customers.
TPG Capital, a private equity firm, develops software and cloud systems for industries such as Wind River automotive, aerospace and defense.
The acquisition also comes at a time when several automakers are embarking on software development to enter a multi-billion dollar market, which could affect auto parts suppliers.
The use of Wind River software will allow Aptiv to introduce new products “faster and cheaper,” Joe Massaro, head of finance at automotive parts maker, said in an analyst call.
Wind River has more than 1,700 customers worldwide, and the company has generated about $ 400 million in revenue for 2021, a figure that will rise to $ 1 billion by 2026.
“In our view, the reason for this was diversification into other sectors (other than automobiles) with strong long-term growth potential and strong global winds,” said Garret Nelson, a CFRA Research analyst.
Aptiv, which has placed Stellantis NV, Volkswagen AG and General Motors Co. among its customers, has struggled with supply chain problems through 2021, but demand for its automated driving systems has been a bright spot.
The company forecasts revenue in 2021 of $ 15.1 billion to $ 15.5 billion, the highest figure in seven years.
He plans to finance the deal through a mix of cash and debt at the box office.
Abhijith Ganapavaram’s interview in Bangaluru; Edited by Aditya Soni