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AUTOMOTIVE NEWS
Published: September 15, 2014 1:09 pm ET
Updated: September 15, 2014 1:16 pm ET
Image By: ZF Friedrichshafen AG
A ZF prototype shows the company's interest in using plastics in major auto systems, including springs and axles.
TRW Automotive Holdings, in a supply chain megadeal that has been in the works since mid-July, said Sept. 15 it has agreed to be acquired by German supplier ZF Friedrichshafen AG for $13.5 billion in cash.
The transaction, for $105.60 per share, will create the world's second-largest auto supplier with pro forma combined revenue of about 30 billion euros ($41 billion) and 138,000 employees TRW and ZF said.
TRW's equity is being valued at about $12.4 billion based on shares outstanding, company officials said, and the company's total enterprise value is being set at $13.5 billion, which includes assumption of debt.
The transaction gives ZF access to TRW’s technology — from air bags to collision sensors — that keeps drivers secure and helps them avoid crashes. Consumer demand and government regulations are spreading the adoption of such features to prevent accidents and protect passengers and pedestrians.
Both companies have plastics operations, but neither is known primarily for it. ZF has been developing composite parts for suspension systems, while TRW has plastics for seat belt and air bag components.
The deal is expected to close during the first quarter of 2015, ZF CEO Stefan Sommer said today.
"The combined company will be well positioned to capitalize on favorable megatrends in the automotive industry by bringing together complementary product offerings and leading technology positions that serve high-growth areas such as fuel efficiency, increased safety requirements, and autonomous driving," the statement said.
ZF has said TRW will be operated as a separate business division within ZF, the statement said.
"We have long respected ZF as a very successful company in our industry with similar values and focus on innovation," TRW CEO John Plant said in a statement. "This transaction provides significant benefits for our shareholders who will receive full and certain value for their shares, as well as for our employees, customers and communities, all of which will reap the benefits of being part of a larger, more diversified global organization."
Image By: ZF
Stefan Sommer
In the statement, Sommer said the acquisition "fits perfectly into our long-term strategy."
"The transaction combines two highly successful companies that have remarkable track records of innovation and growth and solid financial positions. We are strengthening our future prospects by enlarging our product portfolio with acknowledged technologies in the most attractive segments."
Divested JV
Earlier, ZF said it will sell its stake in a joint venture to partner Robert Bosch GmbH, a deal that paves the way for ZF to buy TRW.
Bosch will purchase ZF's half of a steering-systems manufacturer for an undisclosed amount, increasing its stake to 100 percent from 50 percent in ZF Lenksysteme, Bosch said in a statement today.
Bosch, which is the world's largest parts supplier, did not disclose financial terms of the deal. ZF may get $1.75 billion to $2 billion for its 50 percent stake, according to an estimate by Bloomberg Intelligence analysts.
ZF first said July 10 it was in early-stage buyout talks with U.S. auto parts supplier TRW.
Unraveling the Bosch partnership allows ZF to avoid antitrust issues in the purchase of the U.S. company, which also has a large steering-systems business.
Bosch said that taking full control of ZF Lenksysteme will help extend its reach in driver-less technology. The venture is "a technological leader in the growth area of electric power steering, and precisely this is the core technology for automated driving, for more efficient vehicles, and also for electric cars," Bosch CEO Volkmar Denner said in the statement. With the deal, "Bosch is strengthening its ability to actively shape the future of mobility."
In a conference call on Monday to discuss the deal Denner said Bosch hopes to complete the acquisition of by early 2015.
TRW, based in Livonia, Michigan, makes airbags, electronics, and braking and steering equipment for cars globally and sells to nearly all major automakers including Ford and General Motors.
In a separate statement, Sommer said: "In order to continue to be able to meet the demands of an ever more dynamic business environment, Bosch and ZF have decided to change the ownership structure of ZFLS."
ZF ranks No. 9 on the Automotive News list of the top 100 global suppliers, with worldwide sales to automakers of $20.4 billion in 2013. TRW ranks 11th and Bosch is No. 1.
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