TRW Automotive To Be Acquired By ZF Friedrichshafen In $13.5 Bln Deal

(RTTNews) - Auto parts supplier TRW Automotive Holdings Corp. (TRW) agreed Monday to be acquired by Germany's ZF Friedrichshafen AG for $105.60 per share in an all-cash deal valued at about $13.5 billion, including debt. The deal has the unanimously approval of TRW's Board of Directors and ZF's Supervisory Board and Management Board.

"The acquisition of TRW fits perfectly into our long-term strategy. The transaction combines two highly successful companies that have remarkable track records of innovation and growth and solid financial positions. We are strengthening our future prospects by enlarging our product portfolio with acknowledged technologies in the most attractive segments," ZF CEO Stefan Sommer said in a statement.

The offer price of $105.60 represents a 15.5 percent premium over TRW's unaffected closing share price of $91.40 on July 9, the day prior to reports of a preliminary takeover approach from ZF. The total equity value of the deal, excluding debt, in $12.4 billion.

The deal will be funded through a combination of ZF cash on hand, as well as debt financing that has been committed by Citi and Deutsche Bank pursuant to a fully executed credit agreement.

Livonia, Michigan-based TRW Automotive ranks among the world's leading automotive suppliers, while ZF is a global leader in driveline and chassis technology as well as is one of the ten largest automotive suppliers worldwide.

The agreed deal will create a global leader in the automotive supplier business with pro forma combined sales of about 30 billion euros or $41 billion, with half generated from Europe and half from North America, Asia-Pacific and the rest of the world. Following the closure of the deal, TRW will be integrated into ZF as a separate business division.

The acquisition of TRW will help ZF more than double its sales in two of the most significant countries of the world for automotive sales: China and the U.S. TRW also has a strong presence in China. ZF has done business in the U.S. since 1979 and currently operates 12 sites with annual sales volume of 2.8 billion euros or $3.9 billion.

After confirming the preliminary takeover approach by ZF, TRW said on July 9 it is evaluating the proposal as well as other strategic alternatives which may enhance shareholder value. TRW said it will continue to execute its existing business plan while it conducts the analysis. It also hired Goldman, Sachs & Co. (GS) as financial advisor.

The deal, primarily subject to approval by 50 percent of TRW stockholders, is expected to close in the first half of 2015. The closure of the deal is also subject to receipt of regulatory approvals and other customary closing conditions. Following the closing, TRW will be delisted from the New York Stock Exchange.

"We have long respected ZF as a very successful company in our industry with similar values and focus on innovation. This transaction provides significant benefits for our shareholders who will receive full and certain value for their shares, as well as for our employees, customers and communities, all of which will reap the benefits of being part of a larger, more diversified global organization," TRW CEO John Plant stated.

In Monday's regular trading session, TRW is currently trading at $103.00, down $0.85 or 0.82% on a volume of 10.30 million shares. In the past 52-week period, the stock has been trading in a range of $68.72 to $107.25.