July 30, 2015 / 12:20 PM / 3 years ago

Delphi to buy HellermannTyton for $1.7 billion in connected-car drive

(Reuters) - U.S.-listed auto parts supplier Delphi Automotive (DLPH.N) is buying British cable equipment maker HellermannTyton Group HTY.L for about 1.1 billion pounds ($1.7 billion) as it seeks to capitalize on the growing connected-car market.

An autonomous car from Delphi departs Treasure Island for a cross-country trip from San Francisco to New York City in San Francisco, California March 22, 2015. REUTERS/Stephen Lam

Delphi said it expects HellermannTyton, which makes products for fastening, fixing, and protecting cables, to help it take advantage of increasing demand for vehicles that connect to the web and smart devices such as phones and tablets.

“With consumers now demanding more connectivity in their vehicles, electrical architecture is the enabler to that added vehicle content,” said Delphi Chief Executive Kevin Clark.

The acquisition is the latest example of automotive suppliers moving beyond nuts and bolts into higher-value components such as electronics and software.

In May, rival auto supplier Continental AG COGN.DE bought software company Elektrobit Automotive and last September, Germany’s ZF Friedrichshafen pounced on U.S.-based TRW Automotive Holdings Corp, combining one of the largest makers of automatic gearboxes with a maker of automatic safety products.

Vehicle connectivity and methods to increase fuel efficiency are high-margin and high-growth areas in the industry. New safety and anti-pollution rules are forcing cars to become more intelligent so engine management and gear shifting systems are fuel efficient, and so vehicles can better perform semi-automated functions like accident avoidance and cruise control.

Delphi will pay 480 pence in cash for each HellermannTyton share, a 44 percent premium to its closing price on the London Stock Exchange on Wednesday.

Shares in HellermannTyton, which floated in 2013, rose 41.6 percent to 470.5 pence on Thursday. The company was the top FTSE 250 .FTMC gainer and the most actively traded stock on the index.

Delphi also announced some other, smaller, investments on Thursday. It said it had bought software company Ottomatika and made a strategic investment in 3D LiDAR sensing company, Quanergy. It has also made a minority investment in Tula Technology, which develops software that provides cost-efficient, fuel economy gains in cylinder deactivation technology.

Clark said in April that Delphi could spend $1 billion to $3 billion in 2015 on a large acquisition related to its traditional “hardware” business, and would make smaller investments in software.

Reporting by Supriya Kurane in Bengaluru and Edward Taylor in Frankfurt; Editing by Gopakumar Warrier and Pravin Char

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