WABCO Holdings Inc., announced Thursday morning the company has entered into a merger agreement with ZF Friedrichshafen AG (ZF) — an all-cash deal that calls for ZF to acquire all outstanding WABCO shares for $136.50 per share for an equity value of over $7 billion.
The transaction combines WABCO’s capabilities in commercial vehicle safety and efficiency, including technologies involved in vehicle dynamics control, active air suspension systems, braking and fleet management, with ZF’s expertise in driveline and chassis technologies for cars and commercial vehicles.
“The Board strongly believes this is the right combination at the right price at the right time for WABCO,” says WABCO Chairman and CEO Jacques Esculier, who called ZF “an ideal partner” on a conference call this morning. “We have a history of successful collaboration with ZF, including prototyping industry-first technologies, and the strategic fit between our two companies is compelling … [The merger] is a unique opportunity to join forces with the right partner.”
ZF CEO Wolf-Henning Scheider says the the acquisition of WABCO — a company he calls “a specialist and leader for commercial vehicle braking systems” — will enable ZF’s existing commercial vehicle division to expand its dynamic vehicle control capabilities.
“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 says. “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.”
Citing the technological revolution currently in-play across the commercial vehicle segment, Esculier says the time had come for WABCO to evaluate its strategy going forward and that joining forces with ZF provides “access to critical technology and the global size and scale to de-risk the return on investment required as the industry transforms.”
“We see great opportunities ahead, however, they will be more challenging to reach,” he adds. “At some point, every commercial vehicle will feature significantly more advanced technology than is onboard today.”
“It has become increasingly apparent that our industry will face a new level of strategic complexity and will attract new competition, including new entrants from outside the sector, able to bring unprecedented resources to the table,” Esculier says. “This demands WABCO make critical choices in the role it will play in the future industry value chain. Furthermore, it is anticipated that significant in house investment and new alliances will be necessary to address the full scope of required technologies for these new domains.”
The transaction, which has already been approved by ZF’s Management Board and Supervisory Board and WABCO’s board of directors, is expected to close early next year but is subject to approval by shareholders, customary closing conditions and regulatory approvals, the companies say.