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ZF Acquires Wabco


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Transport Topics  /  March 28, 2019

ZF Friedrichshafen AG, a global supplier of mobility systems for commercial vehicles, passenger cars and industrial technology, announced it has entered into a definitive agreement to acquire Wabco Holdings Inc. for $7.1 billion, or $136.50 per share.

The planned acquisition has been approved by ZF’s management board and supervisory board, and Wabco’s board of directors. Once completed, the combined company will have sales of about $45 billion.

Wabco’s products and services include integrated braking systems and stability control, air suspension systems and transmission automation controls, as well as aerodynamics, telematics and fleet management offerings.

“We do not expect other offers and view ZF as the most logical acquirer given their size, complementary commercial vehicle business and stated aim to grow this area of their business,“ R.W. Baird & Co. analyst David Leiker wrote in a note.

“Other companies over time with a rumored interest in Wabco include Continental AG and Cummins Inc., but we do not expect either to make a competing offer. Continental is pursuing other areas of investment, while Cummins has remained focused on powertrain-related products,” Leiker added.

ZF expects to close the transaction in the beginning of 2020.

The acquisition is subject to regulatory approvals, other customary closing conditions and shareholder approval with more than 50% of Wabco’s outstanding shares.

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German supplier ZF agrees to pay $7 billion for Wabco

Automotive News  /  March 28, 2019

Trucking parts supplier Wabco Holdings Inc. on Thursday said it agreed to sell itself to German rival ZF Friedrichshafen in a deal valued at more than $7 billion.

The all-cash deal is for $136.50 per share and represents a 13 percent premium to Wabco's closing price of $120.75 on Feb. 26.

The two companies said the deal, which is expected to close in early 2020, had been unanimously approved by Wabco's board of directors. The deal is contingent on ZF clinching more than 50 percent of Wabco's shares.

Last month, Reuters reported that ZF had held takeover talks with Wabco, as the unlisted company seeks to overhaul its business for an era of self-driving trucks.

Wabco, based in Brussels for tax purposes with its operational headquarters in suburban Detroit, specializes in braking control systems and other safety technologies for commercial vehicles. Last month Wabco reported record annual sales and earnings, posting net income of $394 million on revenue of $3.83 billion. It employs about 16,000 people in 40 countries.

Last year, Wabco invested $20 million to build a 102,000-square-foot headquarters in Auburn Hills, Mich. It's unclear whether ZF will maintain that building or consolidate it with other large operations around suburban Detroit in Livonia and Northville.

Following the acquisition, ZF expects to generate about $44 billion a year in revenue. 

ZF CEO Wolf-Henning Scheider said in a statement: “We believe that, together with WABCO, ZF can form the world’s leading integrated systems provider for commercial vehicle technology, creating long-term value and security for its customers, employees and owners.

"For ZF the acquisition of a specialist and leader for commercial vehicle braking systems means adding a stable and growing business segment and enables our existing commercial vehicle division to expand its expertise in vehicle dynamics control.

"This will create the foundation for ZF to offer comprehensive systems for safe and automated mobility solutions for passengers and goods to our customers."

ZF has done large acquisitions in the past and in 2014 bought TRW Automotive for $13.5 billion to expand into the potentially lucrative self-driving car market.

Previously, ZF has said it plans to invest more than 12 billion euros ($13.6 billion) into e-mobility and autonomous driving. 

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ZF to acquire WABCO in $7 billion deal

Fleet Owner  /  March 28, 2019

With WABCO, ZF looks to form the world’s leading integrated systems provider for commercial vehicle technology as race for autonomous vehicles heats up.

German auto parts manufacturer ZF Friedrichshafen AG is acquiring WABCO Holdings Inc., a global supplier of technologies and services that improve the safety, efficiency and connectivity of commercial vehicles.

The deal will combine WABCO’s specialty in commercial vehicle safety systems — which includes technologies that can automatically slow or stop a vehicle — with ZF’s driveline and chassis technologies.

Under the agreement announced on Thursday, ZF will acquire all outstanding shares of WABCO for $136.50 per share in an all-cash transaction for an equity value of over $7 billion. The acquisition price represents a 13% premium to the closing stock price of $120.75 on Feb. 26, the date before media reports and WABCO’s confirmation that ZF had approached the company.

The acquisition is part of ZF’s Next Generation Mobility strategy and will expand the company’s expertise to include commercial vehicle braking solutions for the first time. This plays a central role for the control of automated driving functions – including emergency braking maneuvers of trucks and trailers.

Following the acquisition, customers of both companies will be able to have a fully integrated system approach, new drive systems for E-Mobility and autonomous driving functions. ZF expects that automated driving functions will primarily be implemented for commercial vehicles and in areas with low complexity and traffic – such as factory sites, at airports, and in agriculture. The combination of both businesses is expected to further accelerate the development of new technologies to enable autonomous commercial vehicle functions, making ZF less dependent on the economic cycle of the passenger car industry.

In a company statement, ZF added that the acquisition is consistent with its goal to develop and deliver technology solutions that make cars and commercial vehicles see, think and act in order to reduce emissions and increase road safety. While ZF already has sensor systems and computing technology for its “see“ and “think” competence, together with WABCO ZF will in future be completing the portfolio for commercial vehicle technologies to offer solutions to allow vehicles to “act”. ZF notes it is already a leading supplier in the area of steering and driveline technology.

“This is the right combination at the right price at the right time for WABCO,” said Jacques Esculier, chairman and CEO of WABCO. “We have a history of successful collaboration with ZF, including prototyping industry-first technologies, and the strategic fit between our two companies is compelling. After a thorough review, we are very pleased to announce a definitive agreement that we believe is in the best interest of WABCO shareholders.”

Wolf-Henning Scheider, CEO of ZF, said: “We believe that, together with WABCO, ZF can form the world’s leading integrated systems provider for commercial vehicle technology, creating long-term value and security for its customers, employees and owners.”

For ZF, the acquisition of a specialist in commercial vehicle braking systems “means adding a stable and growing business segment and enables our existing commercial vehicle division to expand its expertise in vehicle dynamics control,” Scheider added. “This will create the foundation for ZF to offer comprehensive systems for safe and automated mobility solutions for passengers and goods to our customers. This is also in the best interest of our owners, the Zeppelin Foundation and the Dr. Jürgen and Irmgard Ulderup Foundation, as the transaction will result in a sustainable strengthening of ZF.”

Esculier said he’s proud of WABCO’s track record since becoming a stand-alone public company nearly 12 years ago. He added that WABCO’s “early anticipation of industry dynamics and ongoing ability to innovate technology ahead of others are key contributors to our sustained differentiation and success. We are therefore highly attuned to long-range competitive forces and their potential implications as the sector contemplates a future of autonomous, electric and connected vehicles.”

Esculier said it has become apparent that the industry will face “a new level of strategic complexity” and will attract new competition, including new entrants from outside the sector that are able to bring resources to the table.

“Considering these factors, we strongly believe this is the appropriate moment to be joining forces with ZF, providing access to critical technology and the global size and scale to de-risk the return on investment required as the industry transforms. And as a result, it will realize certainty of value and liquidity for our shareholders,” Esculier said.

The transaction, which has been unanimously approved by WABCO’s Board of Directors, is expected to close in early 2020. It is subject to approval by WABCO’s shareholders, customary closing conditions, and regulatory approvals.

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