ZF Friedrichshafen may go on acquisition spree after TRW deal

Article by Christian A., on September 20, 2014

ZF Friedrichshafen would consider another acquisition – particularly for its industrial and trucking businesses -- after agreeing to acquire TRW Automotive Holdings for $13.5 billion. This was disclosed by ZF chief executive Stefan Sommer, who said that another acquisition the size of TRW is unlikely.

He and TRW Chief Executive John Plant have remarked that carmakers moving to global platforms and are looking for suppliers having the technology and the ability to provide it wherever needed. Suppliers are feeling the pressure to develop advanced components from carmakers who are actively seeking for safety features and driverless vehicles that respond wireless road data.

Plant remarked there is a “big burden” on supplier to engineer technology needed for autonomous and connected cars. He noted that a middle-sized company cannot afford to achieve such feat, but only a select few could in the future.

ZF’s acquisition of TRW will result to the creation of a company large enough to counter pricing demands from the largest carmakers and big enough to become the No. 2 best-selling supplier in the world next to Robert Bosch, according to the Automotive News data center.

Sommer noted that ZF was weak in areas where TRW was strong like in active safety systems. The combined company will have enough scale, products and technology to cater to growing demand for safety components and fuel-efficient and lower-emission vehicles.

With the deal, ZF will have access to TRW’s active safety systems technology -- from air bags to collision sensors. Carmakers are quickly installing such systems in their vehicles as more and more consumers consider such technology as a factor in buying their units.

Likewise, more and more countries are creating regulations that require such features in new vehicles.

Weeks ago, it was reported that ZF Friedrichshafen was resuming talks to exit from a joint venture with Robert Bosch. The move – entailing the divestment of a stake of 50 percent in the steering systems joint venture -- would allow ZF Friedrichshafen to acquire TRW Automotive Holdings to avoid antitrust problems as TRW boasts of a huge presence in steering systems.

ZF Friedrichshafen and Bosch formed the joint venture in 1999, which now boasts of annual sales of around $5.5 billion. The German supplier disclosed in July this year that was holding discussion to acquire TRW, a transaction that would pave way to the creation of the largest suppliers in the world by sales. A combination between ZF Friedrichshafen and TRW would dethrone Bosch as the second largest supplier in the world in terms of sales.

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Topics: zf, trw

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