A new “heavyweight” in the automotive components sector has been created today

with the acquisition of TRW Automotive Holdings Corp. by ZF Friedrichshafen AG. TRW announced that it has entered into a definitive agreement with ZF Friedrichshafen, which will see all outstanding TRW shares acquired for US$105.60 per share in an all-cash transaction valued at approximately $13.5 billion. The announcement that TRW is changing hands followed a separate statement from ZF Friedrichshafen announcing the sale of its 50 per cent share in the ZF Lenksysteme GmbH joint venture to partner Robert Bosch GmbH for an undisclosed sum; this transaction is said to have been made to satisfy antitrust requirements prior to the acquisition of TRW.

The price paid for TRW represents a premium of approximately 16 per cent and 15 per cent over TRW’s undisturbed closing stock price of $91.40 on 9 July 2014 and all-time undisturbed high price of $91.62 on 7 July 2014, respectively, and a 7.6x multiple of TRW’s adjusted EBITDA for the 12 months ended 27 June 2014. The agreement has been unanimously approved by TRW’s Board of Directors and ZF’s Supervisory Board and Management Board.

According to TRW Automotive, the transaction will create a global leader in the automotive supplier business with pro forma combined sales of approximately €30 billion and 138,000 employees. The combined company will be well positioned to capitalise on favourable megatrends in the automotive industry by bringing together complementary product offerings and leading technology positions that serve high-growth areas such as fuel efficiency, increased safety requirements, and autonomous driving. ZF Friedrichshafen has stated that TRW will be operated as a separate business division within the company.

“We have long respected ZF as a very successful company in our industry with similar values and focus on innovation,” stated John C. Plant, chairman and chief executive officer of TRW. “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 organisation. Our employees have shown admirable dedication in growing TRW into the formidable company it is today, and our strong performance is a testament to their hard work.”

Stefan Sommer, chief executive officer of ZF Friedrichshafen, said: “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.

“The combination makes sense for all of our constituencies: Customers of both companies will have access to a unique offering under one roof and employees from ZF and TRW will enjoy enhancements that result from the combined organisation,” continued Sommer. “TRW stockholders will receive an attractive valuation and our own shareholders – the Zeppelin and Ulderup foundations – will benefit from improved future prospects and diversification of the combined company.

“Further, this is an acquisition in the spirit of a partnership. We look forward to welcoming TRW’s employees to our company and are committed to working closely with them to realise the potential of this exciting combination. The Detroit metro area will remain a major business centre for the company, and we expect employees from both companies to benefit from the enhanced career opportunities at a larger, more diversified company.”

The transaction will be financed through a combination of ZF Friedrichshafen cash on hand, as well as debt financing that has been committed by Citi and Deutsche Bank pursuant to a fully executed credit agreement. There is no financing condition to this transaction. The closing of the transaction is subject to certain conditions, including approval of the TRW stockholders, receipt of regulatory approvals and other customary closing conditions. The transaction is expected to close in the first half of 2015.

Goldman, Sachs & Co. acted as financial advisor to TRW and Simpson Thacher & Bartlett LLP and Gleiss Lutz acted as TRW’s legal advisors.
ZF Lenksysteme sold to Bosch

Prior to the TRW announcement, ZF Friedrichshafen divested its 50 per cent share in ZF Lenksysteme GmbH (ZFLS) to Robert Bosch GmbH. The operation employs more than 13,000 people in eight countries and develops produces, and sells steering systems for passenger cars and commercial vehicles worldwide. In 2013, it registered sales of approximately €4.1 billion. The transaction is subject to approval by the antitrust authorities.

“With its complete takeover of ZFLS, Bosch is strengthening its ability to actively shape the future of mobility,” said Dr. Volkmar Denner, chairman of the board of management of Robert Bosch GmbH. “The company is a technological leader in the growth area of electric power steering, and precisely this is the core technology for automated driving, for more efficient vehicles, and also for electric cars.”

“Since 1999, ZFLS has experienced strong growth, and has also developed very successfully as a result of the excellent collaboration between ZF and Bosch. I would like to sincerely thank all ZFLS associates for their hard work and dedication over the years,” said Dr. Stefan Sommer, the CEO of ZF Friedrichshafen AG. “In order to continue to be able to meet the demands of an ever more dynamic business environment, Bosch and ZF have decided to change the ownership structure of ZFLS