The supervisory board of ZF Friedrichshafen has given a go-signal to discussions to acquire TRW Automotive Holdings Corp. two people privy with the matter told Bloomberg. The board has allowed the company to continue negotiations with TRW, with target to strike an agreement over the next few weeks, the sources said, with one of them adding that no final decision has been reached and discussions could still break down.
ZF recently confirmed that it is holding talks with TRW over an acquisition, which if successful would pave way to the creation of the second-largest auto-parts supplier in the world in terms of sales.
Reuters has reported that ZF could offer up to $12 billion for TRW, which has a market value of $11.3 billion. Reuters also reported that ZF is lining up $13.4 billion in financing for the acquisition.
TRW CEO John Plant recently declined to update investors on the talks during the company’s conference call for the second-quarter earnings. The acquisition would combine a producer of steering systems and transmissions with a leading provider of car-safety technology.
The acquisition would allow the German supplier to move a step ahead as consumer demand and government regulation are acceleration the adoption of features that prevent accidents and protect passengers and pedestrians. In April, TRW said it expects the market for driver-assistance technology to surge more than five-fold through 2020. [source: Bloomberg]