ZF Friedrichshafen to acquire TRW for $13.5 billion

Sept. 15, 2014
TRW Automotive Holdings Corp. today announced it entered into an agreement with ZF Friedrichshafen AG in which ZF will acquire all outstanding shares of TRW for $105.60 per share in an all-cash transaction valued at approximately $13.5 billion.

TRW Automotive Holdings Corp. today announced it entered into an agreement with ZF Friedrichshafen AG in which ZF will acquire all outstanding shares of TRW for $105.60 per share in an all-cash transaction valued at approximately $13.5 billion.

The acquisition price represents a premium of approximately 16 percent and 15 percent over TRW's undisturbed closing stock price of $91.40 on July 9, 2014 and all-time undisturbed high price of $91.62 on July 7, 2014, respectively, and a 7.6x multiple of TRW's adjusted EBITDA for the 12 months ended June 27, 2014.  The agreement has been unanimously approved by TRW's Board of Directors and ZF's Supervisory Board and Management Board.

The transaction will create a global leader in the automotive supplier business with pro forma combined sales of approximately Euro 30 billion (US$41 billion) and 138,000 employees. 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.  ZF has stated that TRW will be operated as a separate business division within ZF.

John C. Plant, Chairman and CEO of TRW, said: "We have long respected ZF as a very successful company in our industry with similar values and focus on innovation. 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.  Our employees have shown admirable dedication in growing TRW into the formidable company it is today, and our strong performance is a testament to their hard work."

Stefan Sommer, Chief Executive Officer of ZF, said: "The acquisition of TRW 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.

"The combination makes sense for all of our constituencies: Customers of both companies will have access to a unique offering under one roof and employees from ZF and TRW will enjoy enhancements that result from the combined organization. TRW stockholders will receive an attractive valuation and our own shareholders – the Zeppelin and Ulderup foundations – will benefit from improved future prospects and diversification of the combined company.

Sommer continued, "Further, this is an acquisition in the spirit of a partnership. We look forward to welcoming TRW's employees to our company and are committed to working closely with them to realize the potential of this exciting combination. The Detroit metro area will remain a major business center for the company, and we expect employees from both companies to benefit from the enhanced career opportunities at a larger, more diversified company."

The transaction will be financed through a combination of ZF cash on hand, as well as debt financing that has been committed by Citi and Deutsche Bank pursuant to a fully executed credit agreement. There is no financing condition to this transaction. The closing of the transaction is subject to certain conditions, including approval of the TRW stockholders, receipt of regulatory approvals and other customary closing conditions. The transaction is expected to close in the first half of 2015.

Goldman, Sachs & Co. acted as financial advisor to TRW and Simpson Thacher & Bartlett LLP and Gleiss Lutz acted as TRW's legal advisors.

Subscribe to Aftermarket Business World and receive articles like this every month….absolutely free. Click here.

Sponsored Recommendations

ZEUS+: The Cutting-Edge Diagnostic Solution for Smart, Fast, and Efficient Auto Repairs

The new ZEUS+ simplifies your diagnostic process and guides you through the right repair, avoiding unnecessary steps along the way. It gives you the software coverage, processing...

Diagnostic Pre- and Post-scan Reports are Solid Gold for Profitability

The following article highlights the significance of pre-scans and post-scans, particularly with Snap-on scan tools, showcasing their efficiency in diagnosing issues and preventing...

Unlock Precision and Certainty: TRITON-D10 Webinar Training for Advanced Vehicle Diagnostics

The TRITON-D10 lets you dig deep into the systems of a vehicle and evaluate performance with comparative data, systematically eliminating the unnecessary to provide you with only...

APOLLO-D9: Trustworthy Diagnostics for Precision Repairs

The APOLLO-D9 provides the diagnostic information and resources you need to get the job done. No more hunting through forums or endlessly searching to find the right answers. ...

Voice Your Opinion!

To join the conversation, and become an exclusive member of Vehicle Service Pros, create an account today!