ZF to acquire vehicle braking solutions specialist WABCO
March 28, 2019
ZF Friedrichshafen AG, Friedrichshafen, Germany, a leading global technology group and supplier of mobility systems for passenger cars, commercial vehicles and industrial technology, has entered into a definitive agreement to acquire WABCO. The combined company is expected to have annual sales of approximately €40 billion.
Together, ZF and WABCO state that they will form a leading global integrated mobility systems provider for commercial vehicles, creating added value for ZF’s commercial vehicle customers. The planned acquisition, at $136.50 per share for a total equity value of approximately $7 billion, has been approved by ZF’s Management Board and Supervisory Board and WABCO’s Board of Directors.
WABCO is a leading global supplier of braking control systems, technologies and services that improve safety, efficiency and connectivity of commercial vehicles including trucks, buses and trailers. Its products and services include integrated braking systems and stability control, air suspension systems, transmission automation controls, aerodynamics, telematics, and fleet management solutions. WABCO reported €3.3 billion in revenues in 2018 and employs some 16,000 people across forty countries.
Wolf-Henning Scheider, ZF CEO, stated, “We believe that, together with WABCO, ZF can form the world’s leading integrated systems provider for commercial vehicle technology, creating 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.”
“This will create the foundation for ZF to offer comprehensive systems for safe and automated mobility solutions for passengers and goods to our customers,” he continued. “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.”
Jacques Esculier, Chairman and CEO of WABCO, added, “Joining forces with highly respected ZF will create a leading global technology company well positioned to capitalise on future demand for autonomous, efficient and connected commercial vehicles. We have a long history of successful collaboration to develop innovative technologies with ZF with both companies sharing an uncompromising drive for excellence, passion for innovation, and exceptional customer focus.”
The planned acquisition is part of ZF’s Next Generation Mobility strategy and will expand the company’s expertise to include commercial vehicle braking solutions for the first time. This is said to play a central role for the control of automated driving functions – including emergency braking manoeuvres in trucks and trailers.
Following the acquisition, customers of both companies will have a partner in ZF who can offer them a fully integrated system approach, new drive systems for e-mobility, and autonomous driving functions. ZF expects that automated driving functions will primarily be implemented for commercial vehicles and in areas with low complexity and traffic (e.g. factory sites, airports, agriculture).
The combination of both businesses is expected to further accelerate the development of new technologies to enable autonomous commercial vehicle functions, making ZF less dependent on the economic cycle of the passenger car industry. Dr Konstantin Sauer, ZF CFO, explained, “The intended strategic acquisition of WABCO comes at a good time for ZF.”
“Following the successful integration of TRW, ZF has significantly reduced its debt levels. In fact, we overachieved in delivering our debt reduction targets. WABCO is a healthy and growing company with a strong cash flow profile that makes it a seamless fit with ZF and supports the implementation of our strategy,” he concluded.
The transaction is subject to regulatory approvals, other customary closing conditions and shareholder approval with more than 50% of WABCO’s outstanding shares. ZF expects to close the transaction at the beginning of 2020.