Robert Bosch is silent beneficiary of ZF’s TRW takeover

Article by Christian Andrei, on September 18, 2014

With ZF Friedrichshafen's planned acquisition of TRW Automotive on full blast, another German supplier is bound to benefit from the transaction, albeit unexpectedly. Bosch recently announced plans to gain full control of its 50-50 steering joint venture with ZF.

That came after Bosch’s partner disclosed intentions to sell its stake in the joint venture – which build electronic steering systems critical to development of driverless cars – to the largest supplier in the world and purchase TRW for $105.60 a share. ZF has to let go of its holdings in the joint venture, ZF Lenksysteme, to avoid antitrust issues in the acquisition of TRW.

ZF doesn’t have to worry about losing a place in the steering segment since TRW also has a steering systems business largely involved in developing technology that could pave way for autonomous driving. ZF will have to pay TRW around $12.4 billion in cold cash, based on equity value.

TRW said its worth was at around $13.5 billion on an enterprise value basis. A combination of ZF and TRW would result to a company that is large enough to surpass Japan's Denso and Germany's Continental in terms of global sales – to around EUR30 billion ($38.8 billion).

ZF chief executive Stefan Sommer remarked in a telephone conference that modern suppliers need to have a breadth of technology and be "big and powerful."

Its acquisition of TRW would allow ZF to target "automotive megatrends," like fuel efficiency, tightening safety requirements and autonomous driving. ZF is seeking to add electronic components into its fold since its transmission business is being threatened by electric vehicles that have no gearboxes.

Juergen Pieper, an analyst for Bankhaus Metzler, remarked that transmissions are "probably going to be a business that's slowly dying.

Topics: bosch, trw, zf

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