German transmission specialist, ZF Friedrichshafen, is merging with technology company, Wabco, as part of a €7 billion deal.
Under the agreement, 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 per cent premium to the closing stock price of $120.75 on 26 February 2019, the date prior to media reports and Wabco’s confirmation that ZF had approached the company.
The transaction will bring together two global technology leaders serving OEMs and fleets in the automotive and commercial vehicle industry, combining Wabco’s capabilities in commercial vehicle safety and efficiency, including technologies involved in vehicle dynamics control, active air suspension systems, and fleet management systems with ZF’s leading position in driveline and chassis technologies for cars and commercial vehicles.
“This is the right combination at the right price at the right time for Wabco,” said Wabco CEO and Chairman, Jacques Esculier.
“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.
“We are proud of Wabco’s track record since becoming a stand-alone public company nearly 12 years ago, and we believe our 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,” he said.
“We see great opportunities ahead, but they will be more challenging to realise,” Esculier added.
“It has become increasingly apparent that our industry will face a new level of strategic complexity and will attract new competition, including new entrants from outside the sector, able to bring unprecedented resources to the table. This demands Wabco make critical choices in the role it will play in the future industry value chain. Furthermore, it is anticipated that significant in house investment and new alliances will be necessary to address the full scope of required technologies for these new domains.
“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,” he 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.
ZF CEO, Wolf-Henning Scheider, believes that together with Wabco, the business can form the world’s leading integrated systems provider for commercial vehicle technology to create 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,” he said. “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.”