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German auto parts supplier ZF Friedrichshafen has agreed to buy out Wabco, an American company specializing in vehicle safety technology, for $ 7 billion, the latest in a series of major transactions of recent weeks.
Wabco shareholders will receive $ 136.50 per share in a 100% cash transaction, a premium of 13% over the closing price on February 26, after the media announced the possibility of a merger.
The agreement will combine Wabco's strong commercial vehicle safety capabilities, including active suspension and fleet management systems, with ZF's transmission and chbadis technologies for cars and trucks.
The acquisition of ZF comes five years after the US $ 11.7 billion acquisition of a US rival, TRW Automotive, as it began developing autonomous vehicle technology.
Jacques Esculier, President and CEO of Wabco, said the reason for being in agreement was to intensify and boost investment to better compete with new entrants to the sector.
"It has become increasingly clear that our industry will have to deal with a new level of strategic complexity and attract new competitors, including new entrants from outside the sector who can provide unprecedented resources," he said. Mr. Esculier.
"This requires Wabco to make crucial choices in the role it will play in the future industry value chain. In addition, it is expected that significant internal investments and new alliances will be required to address all the technologies required for these new areas. "
The companies said they expect the deal to be finalized in early 2020 after obtaining regulatory approvals around the world.
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