ZF Friedrichshafen resumes talks over exit from Robert Bosch JV

Article by Christian A., on September 7, 2014

ZF Friedrichshafen is resuming discussions to exit its joint venture with Robert Bosch, a move that if successful would allow it to successfully acquire TRW Automotive Holdings, people privy with the matter told Bloomberg. The parties plan to resume talks this week following a short break due to summer holidays.

ZF Friedrichshafen wants to divest its 50-percent stake in the steering-systems venture to Bosch to avoid antitrust problems since TRW boasts of a significant presence in steering systems, people privy with the matter said. The sources said if Bosch agrees with ZF, a deal to acquire TRW could come as early as next week. ZF and Bosch established the joint venture in 1999, which now boasts of around $5.5 billion in annual sales.

Both ZF and TRW have agreed on the broad outline of a merger, one of the sources told Bloomberg. The parties have talked about a price of between $105 and $110 per share, although the final figure is still under negotiations.

The German supplier in July that it is holding talks to acquire TRW – a transaction that would result to the second-largest supplier in world by sales. Bosch currently holds that throne.

Then in early August, supervisory board of ZF Friedrichshafen has given the green light to resume to discussions to acquire TRW Automotive Holdings Corp., as reported by Bloomberg citing two people privy with the matter. The supervisory board has allowed ZF Friedrichshafen to resume negotiations with TRW, with the aim of closing an agreement over the next few weeks.

The talks between ZF Friedrichshafen and TRW over an acquisition, when successful, would result to the creation of the second-largest auto-parts supplier in the world in terms of sales. According to Reuters, ZF Friedrichshafen could offer up to $12 billion for TRW, which comes with a market value of $11.3 billion. Reuters also reported that ZF Friedrichshafen is availing of up to $13.4 billion in financing for the deal.

The acquisition would effectively combine a global producer of steering systems and transmissions with a leading provider of car-safety technology. The acquisition would allow ZF Friedrichshafen to move a step ahead as consumer demand and government regulation are accelerated by the adoption of features preventing accidents and protecting passengers and pedestrians.

In April, TRW said it expects the market for driver-assistance technology to surge more than five-fold through 2020.

Headquartered in Friedrichshafen, Germany, ZF Friedrichshafen AG is a German car parts maker established in 1915 by Luftschiffbau Zeppelin GmbH to produce gears for Zeppelins and other airships. The “Zahnradfabrik” (ZF) is a German term that means 'gear factory' in English.

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Topics: zf, bosch, joint venture

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