German auto parts supplier ZF Friedrichshafen AG has received US antitrust clearance to purchase TRW Automotive Holdings Corp for $13.5 billion – though the authorities have also imposed certain conditions.
According to the US Federal Trade Commission, some of the TRW assets will need to be purchased by other companies in order for the deal to go through and the US approval comes after the European one was gained back in March. The purchase of the US auto parts maker by the German rival will deliver the second largest automotive supplier of the world, behind only Germany’s Robert Bosch GMBH. The kind of industry consolidation seen in the auto parts sector has also been called upon by some auto industry executives – the most vocal proponent lately being Fiat Chrysler Automobiles NV chief executive officer Sergio Marchionne. He has shown on numerous occasions the willingness to have the world’s seventh largest automaker merged or purchased by another global peer in order to lower development costs in the challenging and rapidly evolving automotive sector landscape.
As far as the deal between TRW and ZF is concerned, the FTC said the only setbacks for the two competitors are the fact they are two of the only three North American suppliers of tie rods – the parts that make the connection between the vehicle’s wheels and the steering ensemble. In order to have the antitrust approval, the companies have pledged to divest TRW’s linkage and suspension units in Europe and North America sold to interested parties.