ZF
Friedrichshafen AG, a leading global technology group and supplier of mobility
systems for passenger cars, commercial vehicles and industrial technology, has announced
that it has entered into a definitive agreement to acquire Wabco for $136.50
per share for a total equity value of approximately $7 billion (Rs 48,514 crore
approx.) The closing is expected for early 2020
The
planned acquisition has been approved by ZF’s Management Board and Supervisory
Board and Wabco’s Board of Directors. Together, ZF and WABCO will form a
leading global integrated mobility systems provider for commercial vehicles,
creating added value for ZF’s commercial vehicle customers. The combined
company will have sales of approximately Euros 40 billion (Rs 3,11,194 crore).
Wabco
is a leading global supplier of braking control systems, technologies and
services that improve safety, efficiency and connectivity of commercial
vehicles including trucks, buses and trailers. Its diverse products and
services include integrated braking systems and stability control, air
suspension systems, transmission automation controls, as well as aerodynamics,
telematics, and fleet management solutions. Wabco, which is listed on the New
York Stock Exchange (NYSE), generated Euros 3.3 billion in revenues in 2018 and
has some 16,000 employees in 40 countries.
Wolf-Henning
Scheider, CEO of ZF, said: “We believe that, together with Wabco, ZF can form
the world’s leading integrated systems provider for commercial vehicle
technology, creating long-term value and security for its customers, employees
and owners. For ZF the acquisition of a specialist and leader for commercial
vehicle braking systems means adding a stable and growing business segment and
enables our existing commercial vehicle division to expand its expertise in vehicle
dynamics control. This will create the foundation for ZF to offer comprehensive
systems for safe and automated mobility solutions for passengers and goods to
our customers. This is also in the best interest of our owners, the Zeppelin
Foundation and the Dr. Jürgen and Irmgard Ulderup Foundation, as the
transaction will result in a sustainable strengthening of ZF.”
Jacques
Esculier, Chairman and CEO of Wabco, said: “Joining forces with highly
respected ZF will create a leading global technology company well positioned to
capitalise on future demand for autonomous, efficient and connected commercial
vehicles. We have a long history of successful collaboration to develop
innovative technologies with ZF with both companies sharing an uncompromising
drive for excellence, passion for innovation, and exceptional customer focus.”
Combination of successful and complementary
business lines
The
planned acquisition is part of ZF’s Next Generation Mobility strategy and will
expand the company’s expertise to include commercial vehicle braking solutions
for the first time. This plays a central role for the control of automated
driving functions – including emergency braking manoeuvres of trucks and
trailers. Following the acquisition, customers of both companies will have a
partner in ZF who can offer them a fully integrated system approach, new drive
systems for E-Mobility and autonomous driving functions. ZF expects that
automated driving functions will primarily be implemented for commercial
vehicles and in areas with low complexity and traffic (e.g. factory sites,
airports, agriculture). The combination of both businesses is expected to
further accelerate the development of new technologies to enable autonomous
commercial vehicle functions, making ZF less dependent on the economic cycle of
the passenger car industry.
The
planned strategic acquisition of Wabco is consistent with ZF’s goal to develop
and deliver technology solutions that make cars and commercial vehicles see,
think and act in order to reduce emissions and increase road safety. While ZF
already has sensor systems and computing technology for its “see“ and “think”
competence, together with Wabco, ZF will in future be completing the portfolio
for commercial vehicle technologies to offer solutions to allow vehicles to
“act”. ZF is already a leading supplier in the area of steering and driveline
technology.
Dr.
Konstantin Sauer, CFO of ZF, said: “The intended strategic acquisition of Wabco
comes at a good time for ZF. Following the successful integration of TRW, ZF
has significantly reduced its debt levels. In fact, we overachieved in
delivering our debt reduction targets. Wabco is a healthy and growing company
with a strong cash flow profile that makes it a seamless fit with ZF and
supports the implementation of our strategy.”
The
transaction is subject to regulatory approvals, other customary closing
conditions and shareholder approval with more than 50 percent of Wabco’s outstanding
shares. ZF expects to close the transaction in the beginning of 2020.Due to the
cash flow profile of both parties, ZF expects to reduce financial leverage
significantly again following the completion of the transaction.
Source: ZF Friedrichshafen AG