ZF makes $14 billion bet on TRW

TRANSMISSION giant ZF Friedrichshafen AG will buy American safety systems supplier TRW Automotive Holdings Corp for $A13.7 billion as it positions itself for a future based on self-driving cars and electric vehicles.

ZF chief executive officer Stefan Sommer said the acquisition of TRW was a strategic decision to ensure the company was better equipped for the road ahead with a larger product portfolio to draw on.

“The acquisition of TRW fits perfectly into our long-term strategy,” Mr Sommer said.

“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.”

ZF is looking to transform its business in preparation for the arrival of electric cars that do not require gearboxes.

With ZF being a major player in driveline and chassis systems and TRW being a supplier of safety technologies and advanced driver assistance systems the combined company will be position well as self-driving cars make their entrance into the market.

ZF bought TRW in an all-cash transaction for about $A13.7 billion, with TRW stockholders receiving $A116.32 per share. Funds were raised through loans with Citigroup and Deutsche Bank.

ZF first had to sell its 50 per cent share of ZF Lenksysteme – a joint venture it had with Bosch. Not only did this generate funds to assist ZF with its buy-out, but the move meant any anti-trust issues could be avoided between the companies working on similar autonomous technology.

The acquisition of TRW will make ZF an auto parts world leader with global sales of $A45 billion and a combined workforce of 138,000 employees.

The move will double ZF’s sales in the US and also in China which currently accounts for two-thirds of the company’s regional sales of $A4.5 billion in Asia-Pacific.

ZF said it would keep its German headquarters. TRW will be integrated as a separate business division.