According to sources that have knowledge of the proceedings, lenders of German auto supplier ZF Friedrichshafen AG told the company it could offer a higher bid to acquire TRW Automotive, valuing it at no less than $13 billion.
The people, who declined to be named when discussing private matters, said that ZF – which is working with Citigroup, Morgan Stanley and a number of other European banks – is mulling a proposed takeover bid that would see TRW ranging from $110 to $112.50 a share. According to one of the persons, the price is still under debate, and there’s no deal signed yet, but the negotiations have been picking up pace.
ZF confirmed last week the ongoing takeover bid, moving to create the world’s second-biggest auto-parts maker by sales – as the two companies don’t have overlapping business segments. The first is a renowned steering and transmissions supplier and the latter a well established supplier of car-safety technology.
According to the sources, ZF, which added more banks over the weekend to fund its bid, could borrow from the lenders as much as four times its and TRW’s total earnings before interest, taxes, depreciation and amortization (Ebitda). That would mean the German supplier could get as much as $16 billion from the banks.