Aptiv buys Wind River for $4.3 billion in cash

Auto parts maker Aptiv PLC said on Tuesday it would buy software developer Wind River for $4.3 billion in cash to strengthen its offerings as the auto industry accelerates spending on self-driving and electrification.  

The deal is Aptiv’s most extensive arrangement since Delphi Technologies spun off in 2017. It will also help it capitalize on the shift to software-oriented vehicles and diversify its revenue stream through Wind River’s multi-sector clientele.  

It also marks a win for TPG, making a public market debut later this week. The private equity shop paid around US$500 million for Wind River when the business was carved out from Intel Corp in 2018, according to sources familiar with the matter.  

It is worth mentioning that Wind River has more than 1,700 customers globally, and the company posted about $400 million in revenue for 2021, with the figure forecast to rise to $1 billion by 2026.  

“We think the rationale was strong long-term growth potential and diversification into other industries (beyond automotive) with robust secular tailwinds,” CFRA Research analyst Garrett Nelson said.  

Stellantis NV, Volkswagen AG, and General Motors Co are among its customers and battled supply chain problems for much of 2021. Still, demand for its automated driving systems has been a bright spot. 

Owned by private equity firm TPG Capital, Wind Rivers develops software and cloud systems for the automotive, aerospace, and defense industries.  

In addition, the purchase happens while many automakers are moving software development in-house to tap into a multi-billion-dollar market, potentially affecting auto parts suppliers.  

Using Wind River’s software will allow Aptiv to introduce new products “faster and more cost-effectively,” Joe Massaro, the finance chief of the auto parts maker, said.  

The company has since been growing its product offerings, focusing on industrial, defense, and automotive, as well as 5G, counting Aptiv and Verizon Communications as its customers.  

Last but least, Wind Rivers has forecast 2021 revenue of $15.1 billion to $15.5 billion, which would be its highest in seven years.