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ZF-TRW Merger Worth $13.5b

ZF-TRW Merger Worth $13.5bZF-TRW Merger Worth $13.5b

 TRW Automotive, one of the largest safety parts makers, said that it agreed to be acquired by the German auto parts maker ZF Friedrichshafen in a deal that valued the company at $13.5 billion.

The transaction is expected to create one of the world’s largest auto parts suppliers with combined sales of about $41 billion and 138,000 employees, NY Times reported.

The US-based  TRW is expected to be operated as a separate division within ZF.

ZF, based in Friedrichshafen, in southern Germany, said it would pay $105.60 a share in cash for TRW, or about $12.4 billion in equity value for the deal. The price is a 16 percent premium over TRW’s closing price on July 9, the day before it confirmed it had received a preliminary takeover offer.

“The acquisition of TRW fits perfectly into our long-term strategy,” Stefan Sommer, the ZF chief executive, said in a news release. “We are strengthening our future prospects by enlarging our product portfolio with acknowledged technologies in the most attractive segments.”

The merger has been approved by the boards of both companies. The transaction is subject to regulatory approval and is expected to close in the first half of 2015.

ZF said in July that it was in a “preliminary stage” of discussing a possible acquisition of TRW, based in Livonia, Mich.

The deal is expected to be financed through a combination of cash on hand and debt. Citigroup and Deutsche Bank have agreed to provide financing to ZF.

Earlier Monday, ZF agreed to sell its stake in a steering systems joint venture to its partner Robert Bosch, a move expected to ease regulatory approval of the TRW transaction. Bosch will buy ZF’s 50 percent stake in the joint venture, ZF Lenksysteme. The purchase price wasn’t disclosed.

By taking full control of ZF Lenksysteme, “Bosch is strengthening its ability to actively shape the future of mobility,” Volkmar Denner, the Bosch chairman, said in a news release.

The joint venture, based in Schwabisch Gmund, Germany, manufacturers steering systems for passenger cars and commercial vehicles. It employs more than 13,000 people in eight countries and had sales of 4.1 billion euros, or about $5.3 billion, in 2013.

TRW makes air bags, crash sensors and other parts used to protect passengers. It had sales of $17.4 billion in 2013, and employs more than 65,000 people. The company was spun out of the defense contractor Northrop Grumman in 2002.

Financialtribune.com