- Combined Company With Pro Forma Sales of More Than € 30 Billion and 138,000 Employees
- Complementary Portfolio of Acknowledged Products and Technologies Benefitting from Megatrends Such as Fuel Efficiency, Increased Safety Requirements and Autonomous Driving
- Balanced Regional and Customer Portfolio in Both Volume and Premium Segments
- All Cash Transaction at Full and Certain Value for TRW Stockholders
Friedrichshafen, Germany and Livonia, MI, USA. ZF Friedrichshafen AG and TRW Automotive Holdings Corp. (NYSE: TRW) today announced that they have entered into a definitive agreement under which ZF will acquire TRW. The combined company will be a global leader in the automotive supplier business with pro forma combined sales of about € 30 billion (approx. US$ 41 billion) and 138,000 employees. Together, ZF and TRW will be uniquely positioned to benefit from the megatrends of the automotive industry on a global basis.
Combination of two Highly Successful Technology Leaders
Both companies have acknowledged technology positions in high-growth segments that profit from the megatrends towards fuel efficiency, increased safety requirements and autonomous driving. ZF is an important player in driveline and chassis technologies, whereas TRW is a significant supplier of active and passive safety technologies, including advanced driver assistance systems. Both companies have demonstrated a strong track record based on high product quality and continued innovation for their customers.
Globally, pro-forma combined R&D investments (total company funded engineering expenses incl. R&D, ref. to FY 2013) will amount to approximately € 1.5 billion (about US$ 2.1 billion), making ZF a global leader in R&D.
Stefan Sommer, Chief Executive Officer of ZF, 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.”
Sommer continued: “This is an acquisition in the spirit of a part-nership. We look forward to welcoming TRW’s employees to our company and are committed to working closely with them to realize the potential of this exciting combination. The Detroit metro area will remain a major business center for the company, and we expect employees from both companies to benefit from the enhanced career opportunities at a larger, more diversified company.”
John C. Plant, Chairman and CEO of TRW, said: “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 a 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. 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.”
U.S. and China Sales Volumes to More Than Double
With the acquisition of TRW, ZF would more than double its sales in two of the most significant countries of the world for automotive sales: China and the United States.
ZF has done business in the U.S. since 1979 and currently operates 12 sites, including a production site for automatic transmission systems in South Carolina that was opened in mid-2013. Through the transaction, ZF would significantly increase its annual sales volume in the U.S. from € 2.8 billion (US$ 3.9 billion) to € 6.5 billion (US$ 9.0 billion).
ZF’s presence in China, accounting for two thirds of the company’s total regional sales of € 3 billion (US$ 4.1 billion) in Asia-Pacific, would be significantly strengthened as a result of the combination. Together with TRW, which also has a strong presence in China, ZF would achieve a sales volume of € 4.0 billion (US$ 5.5 billion) in China. Furthermore, the combined company would achieve annual sales of about € 5.4 billion (approx. US$ 7.5 billion) in the Asia-Pacific region.
Both companies have invested heavily into expanding their pro-duction footprint over recent years. Further, both have major pro-duction sites and strong R&D operations in China: ZF is currently expanding its R&D Center in Shanghai to 800 employees which is a 30 minute drive away from TRW’s new R&D facility. The TRW facility will eventually house 1,200 employees, making it TRW’s largest R&D site worldwide.
Balanced Regional and Customer Portfolio
The combined group will generate about half of its sales in Europe and half in North America, Asia-Pacific and the rest of the world. The transaction will also lead to a balanced portfolio of customers in both the premium and the volume segments. TRW achieves a large portion of sales in the volume segment and maintains strong relationships with US and European volume manufacturers. ZF possesses a broader customer base and is strong among premium car producers. Further, the combined company will be well positioned to supply car manufacturers in Asia.
TRW to Become a Separate Business Division of ZF
ZF will remain headquartered in Friedrichshafen. TRW will be integrated into ZF as a separate business division. No decisions about management responsibilities for the TRW business have been made yet. The companies plan to establish integration teams consisting of balanced representation from both companies to ensure a seamless integration that positions the combined company for accelerated growth while addressing potential challenges for employees and customers. Due to the complementarity of the two companies the main focus will be on growth while cost synergies are expected to be mainly derived from greater purchasing power and sharing best practise standards.
Full and Certain Value for TRW Stockholders
Under the terms of the agreement, ZF will acquire TRW in an all-cash transaction valued at approximately US$ 12.4 billion based on equity value. The agreement has been approved by ZF’s Supervisory Board and Management Board and TRW’s Board of Directors. TRW stockholders will receive US$ 105.60 in cash for each share of TRW stock.
Transaction Fully Financed on Conservative Terms
ZF has received firm financing commitments from Citigroup and Deutsche Bank and remains committed to its conservative finan-cial policy. Due to the strong growth and cash flow profile of the combined company, ZF expects to reduce its financial leverage significantly again in the coming years.
Transaction Closing Conditions
The transaction is subject to several customary closing conditions, including antitrust and US foreign investment clearance and the approval of TRW’s stockholders representing more than 50 percent of TRW’s outstanding shares. ZF expects the transaction to close in the first half of 2015. Following the closing, TRW will be delisted from the New York Stock Exchange.
Benefits for all Stakeholders
Stefan Sommer added: “The combination makes sense for all of our constituencies: Customers of both companies will have access to a broader offering under one roof and employees from ZF and TRW will enjoy enhancements that result from the combined organization. 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.” Prof. Dr. Giorgio Behr, Chairman of the ZF Supervisory Board, underlined that “both companies make this step from a position of strength. They have excellent growth prospects”.
Citigroup and Deutsche Bank acted as financial advisors to ZF, Sullivan & Cromwell as legal advisor.
About ZF Friedrichshafen
ZF is a global leader in driveline and chassis technology with 122 production companies in 26 countries. In 2013, the Group achieved a sales figure of € 16.8 billion with approximately 72 600 employees. In order to continue to be successful with innovative products, ZF annually invests about 5% of its sales (2013: € 836 million) in research and development. ZF is one of the ten largest automotive suppliers worldwide.
For further press information and photos please visit: www.zf.com
About TRW Automotive Holdings
With 2013 sales of $17.4 billion, TRW Automotive ranks among the world's leading automotive suppliers. Headquartered in Livo-nia, Michigan, USA, the company, through its subsidiaries, oper-ates in 24 countries and employs approximately 65,000 people worldwide. TRW Automotive products include integrated vehicle control and driver assist systems, braking systems, steering sys-tems, suspension systems, occupant safety systems (seat belts and airbags), electronics, engine components, fastening systems and aftermarket replacement parts and services.
For further press information and photos please visit: www.trw.com
Cautionary Statement Regarding Forward-Looking Statements
This communication contains “forward-looking statements”. By their nature, for-ward-looking statements involve a number of risks and uncertainties. Actual results could differ materially from those projected or forecast in the forward-looking statements. The factors that could cause actual results to differ materially include the following: the possibility that the parties may be unable to achieve expected synergies in the acquisition within the expected timeframes or at all and to successfully integrate TRW’s operations into those of ZF; such integration may be more difficult, time-consuming or costly than expected; operating costs, customer loss and business disruption (including, without limitation, difficulties in maintaining relationships with employees, customers, suppliers or other business partners) may be greater than expected following the transaction; the retention of certain key employees at TRW may prove more difficult than expected; the conditions to the completion of the transaction may not be satisfied, or the regulatory approvals required for the transaction may not be obtained on the terms expected or on the anticipated schedule; the intense competition to which ZF and TRW are subject; the requirements of changing operating environments; the significant amount of debt ZF is incurring in connection with the transaction; and the other factors discussed in ZF’s public reports, which are available at www.zf.com and TRW’s filings with the SEC which are available at www.sec.gov. ZF as-sumes no obligation to update the information in this communication, except as otherwise required by law. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date hereof.
Additional Information and Where to Find It
This communication may be deemed to be solicitation material in respect of the proposed acquisition of TRW by ZF. In connection with the proposed acquisition, ZF and TRW intend to file relevant materials with the SEC, including TRW’s proxy statement on Schedule 14A. STOCKHOLDERS OF TRW ARE URGED TO READ ALL RELEVANT DOCUMENTS FILED WITH THE SEC, INCLUDING TRW’S PROXY STATEMENT, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. Investors and security holders will be able to obtain the documents free of charge at the SEC’s web site, www.sec.gov, and TRW stockholders will receive information at an appropriate time on how to obtain transaction-related documents for free from TRW.
Participants in Solicitation
ZF and its supervisory and management board members, and TRW and its directors and executive officers, may be deemed to be participants in the solicitation of proxies from the holders of TRW common stock in respect of the proposed trans-action. Information about the supervisory and management board members can be found in ZF’s 2013 annual report and on ZF’s website. Information about the directors and executive officers of TRW is set forth in the proxy statement for TRW’s 2014 Annual Meeting of Stockholders, which was filed with the SEC on March 26, 2014. Investors may obtain additional information regarding the inter-est of such participants by reading the proxy statement regarding the acquisition when it becomes available.
Source: ZF Friedrichshafen AG