Germany’s ZF acquires TRW for $11.7 billion image

German automotive parts supplier ZF Friedrichshafen AG has signed a deal to offer $11.7 billion for the purchase of TRW Automotive Holdings Corp., creating the world’s second largest car parts maker.

The deal is actually worth $13.5 billion (8.3 billion pounds) when the debt is included, with the new global supplier having a consolidated sales revenue of at least $40 billion. ZF has agreed to pay $105.60 in cash for each TRW share, which is higher than the company’s stock was priced before the German company’s interest was known.

“The combined companies are clearly going to have a lot of scale and depth,” comments Joseph Spak, an analyst for RBC Capital Markets in New York. “They’re combining a number of key technologies as the world is moving toward autonomous driving.”

This is also one of the priciest takeovers in the auto parts business, as the negotiated price represents no less than 7.6 times TRW’s earnings before interest, tax, depreciation and amortization for the year ended June 2014.

Livonia, Michigan-based TRW has Volkswagen among its biggest clients but also sells components to almost all major automakers and produces airbags, electronics, and braking and steering equipment for cars.

ZF is a privately held company that makes chassis parts for many carmakers, including Audi and BMW and makes around 50% of profit in the European region, with a 2013 revenue of around 16.84 billion euros.

Via Reuters, Bloomberg