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ZF buys TRW

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Acquisition, divestment & Spinoff

Auto-parts maker ZF has agreed to buy safety systems supplier TRW for USD105.60 per share in an all-cash deal. TRW will become a separate business division within ZF. We look at the structure of the deal, what it means for the new company’s balance sheet and how it could change the automotive supply industry

German car parts manufacturer ZF Friedrichshafen (ZF) has reached an agreement to purchase US-based auto safety systems supplier TRW Automotive Holdings (TRW) in an all-cash deal, according to statements released by both companies. ZF will pay USD105.60 per share for all outstanding shares in TRW. The all-cash deal is valued at about USD13.5 billion “on an enterprise value basis”, though TRW’s market capitalisation is estimated at USD11.46 billion. According to TRW, the share price is a premium of 16% over TRW’s undisclosed closing stock price on 9 July and a 15% premium over its all-time high undisturbed stock price of USD91.62, on 7 July − both dates before the potential deal was known. The purchase amount is 7.6 times TRW’s adjusted earnings before interest, taxation, depreciation, and amortisation (EBITDA) for the 12 months ended 27 June, a few days after ZF made the first offer.

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