BorgWarner sent shockwaves through the automotive industry Tuesday when it announced it intends to acquire Delphi Technologies in an all-stock deal.
First reported by Bloomberg, the $1.5 billion acquisition was valued at $3.3 billion when including debt. BorgWarner says Delphi’s combustion-propulsion product line will complement its own portfolio, which is focused on clean technologies to increase efficiency and performance of modern combustion vehicles.
Bloomberg wrote Tuesday that both BorgWarner and Delphi believe their engine and transmission businesses are expected to enter a period of decline as carmakers consolidate and pivot to electric cars. Delphi CEO Rick Dauch said as much during an electrification-centric panel at Monday’s Heavy Duty Aftermarket Dialogue (HDAD). Both manufacturers have been investing in hybrid and electric technologies to prepare for an electric-centric future.
Under the terms of the agreement, which has been approved by the boards of directors of both companies, Delphi Technologies stockholders would receive a fixed exchange ratio of 0.4534 shares of BorgWarner common stock per Delphi Technologies share. Upon closing of the transaction, expected in the second half of 2020, current BorgWarner stockholders are expected to own approximately 84 percent of the combined company, while current Delphi Technologies stockholders are expected to own approximately 16 percent.
“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,” says Frédéric Lissalde, president and CEO, BorgWarner. “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.”
“This is a compelling transaction that we are confident delivers clear benefits to our stakeholders,” adds Dauch. “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.”