BorgWarner Inc., headquartered in Auburn Hills, Michigan, USA, and Delphi Technologies PLC, headquartered in London, UK, have entered into a definitive transaction agreement, which will see BorgWarner acquire Delphi in an all-stock transaction valued at approximately $3.3 billion. The deal is said to give BorgWarner a unique, more comprehensive portfolio of industry-leading propulsion products and systems across combustion, hybrid and electric applications.
According to BorgWarner, the acquisition will strengthen its power electronics products, capabilities and scale, enabling the company’s evolution towards propulsion markets of the future. Following the close of the transaction, the combined company expects to be one of the leading propulsion companies globally, serving light and commercial vehicle manufacturers and aftermarket.
BorgWarner states that under the terms of the agreement, which has been approved by the boards of directors of both companies, Delphi Technologies stockholders will receive a fixed exchange ratio of 0.4534 shares of BorgWarner common stock per Delphi Technologies share. Upon closing of the transaction, current BorgWarner stockholders are expected to own approximately 84% of the combined company, while current Delphi Technologies stockholders are expected to own approximately 16%. In the fiscal year 2019, BorgWarner and Delphi Technologies are reported to have generated an estimated $10.17 billion and $4.36 billion of net sales, respectively.
Following the close of the transaction, the combined company will be led by Frédéric Lissalde, BorgWarner’s President and CEO, and Kevin Nowlan, BorgWarner’s CFO, and will operate as BorgWarner. The transaction is expected to close in the second half of 2020.
“This exciting transaction represents the next step in BorgWarner’s balanced propulsion strategy, strengthening our position in electrified propulsion as well as our combustion, commercial vehicle and aftermarket businesses,” stated Frédéric Lissalde. “Delphi Technologies will bring proven leading power electronics technologies, talent and scale that will complement our hybrid and electric vehicle propulsion offerings. As a combined company, we look forward to delivering enhanced solutions to our customers while driving increased value for our stockholders.”
Lissalde added, “We have a great deal of respect for Delphi Technologies’ team around the world and look forward to welcoming them to BorgWarner. We are confident that together we will be able to move faster to address market trends toward electrification.”
Richard F Dauch, CEO of Delphi Technologies, commented, “This is a compelling transaction that we are confident delivers clear benefits to our stakeholders. Delphi Technologies’ portfolio is highly complementary to BorgWarner’s, and together we plan to create a pioneering propulsion technologies company uniquely equipped to serve OEMs and aftermarket customers around the world.”
“BorgWarner’s team shares our focus on addressing today’s and tomorrow’s challenges, and the combination will create exciting opportunities for our employees. We also expect our stockholders will benefit from the opportunity to participate in the future growth and upside potential of the combined company,” Dauch added.