ZF talks for TRW said to hinge on Bosch JV exit
FRANKFURT (Bloomberg) ZF Friedrichshafen’s ambitions to become the world’s No. 2 supplier are being held up by negotiations to exit a joint venture with Robert Bosch, according to people familiar with the matter.
Unraveling the partnership, which was formed in 1999 and has about $5.5 billion in annual revenue, is complex and many of the key parties are away for summer holidays,
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ZF aims to reach a deal with TRW whose shares closed at $99.57 (about 74.40 euros) Thursday, giving it a value of about $11 billion in the first half of September,
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The companies have held talks on a sale at a price of about $105 to $110 per share, though the amount is still being negotiated, the people said.
Last month, ZF and its advisers at Citigroup Inc.
Negotiations were initially expected to take three to four weeks and conclude in mid August, people said last month.
Delays to the process now mean that timetable is unlikely to be met.
The Bosch joint venture has added complexity to the deal because of a contractual clause that bans whoever ends the tie up from competing in the steering systems business for a defined time period, one of the people said.
If ZF can’t raise enough money from the sale of its stake to help finance the TRW acquisition, it’s possible the deal could fall apart, the person said.
The German company’s supervisory board has told CEO Stefan Sommer his position is safe even if a deal isn’t reached, another person said.
Representatives for ZF,
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A combination would create a company with almost $40 billion in annual sales, vaulting ZF to the No. 2. spot among world’s largest auto parts suppliers, just behind Stuttgart based Bosch, rankings compiled by Automotive News Europe sister publication Automotive News show.
Based in Friedrichshafen, Germany, ZF makes steering systems, clutches and axles, and transmissions, including the fuel efficient,
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Reuters reported earlier this month that the company was considering selling its stake in the steering business to resolve expected antitrust issues. Its primary shareholder is the Zeppelin Foundation, started by airship pioneer Ferdinand von Zeppelin in 1908.
