German car parts maker ZF Friedrichshafen has reached a deal to buy US-based TRW Automotive Holdings for $105.60 per share, creating a global automotive supply powerhouse.
The transaction values the US company at approximately US$12 billion.
The merger would create one of the world’s largest automotive suppliers with combined annual revenue exceeding US$40 billion.
TRW, based in Livonia, Michigan, makes airbags, electronics, and braking and steering equipment for cars globally. It sells to nearly all major automakers, including Ford Motors and General Motors.
The company, which had sales of US$17.4 billion last year, counts Volkswagen AG as its largest customer and gets about 40% of its revenue from Europe.
Privately-owned ZF Friedrichshafen, which supplies chassis components to companies including Audi AG and BMW, generates about half of its revenue in Europe and posted 2013 revenue of US$21.7 billion.
The deal represents a multiple of about 7.5 times TRW’s estimated earnings before interest, tax, depreciation and amortisation in 2014, making it one of the most expensive takeovers in the auto parts sector.
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