ZF Friedrichshafen has inked an agreement to acquire TRW Automotive Holdings for $105.60 per share, paving way for the creation of second-largest auto supplier in the world. The companies have a pro forma combined revenue of around EUR30 billion ($41 billion) and 138,000 employees. Under the terms of the agreement, ZF will acquire TRW for around $12.4 billion in an all-cash transaction.
TRW said in a press release that ZF would purchase all of its outstanding shares in an agreement worth $13.5 billion on an enterprise value basis. ZF is offering to acquire the share at a price higher than TRW’s closing price on July 9. The price is also almost eightfold of TRW's earnings before interest, tax, depreciation and amortization for the year ended June 2014.
The agreement is expected to be finalized by the first quarter of 2015. It should also first receive a go-signal from TRW’s shareholders at a special meeting. TRW said in a statement that the combined company will be well-positioned to take advantage of on “favorable megatrends” in the auto industry by bringing together complementary product offerings and leading technology positions.
Once the acquisition is completed, TRW will work as a separate business division within ZF. TRW chief executive John Plant said in a statement that ZF’s acquisition of his company provides significant benefits for TRW shareholders who are bound to get full and certain value for their shares.
He added that TRW’s employees, customers and communities will also benefit from the transaction as they will become part of a larger, more diversified global organization.