ZF swallows TRW Automotive to form world's second largest supplier

September 15, 2014 // By Christoph Hammerschmidt
In a megadeal that has been in the offing for several months, automotive parts company ZF Friedrichshafen has acquired US-based TRW Automotive. The move creates the world's second largest automotive suppliers after Robert Bosch GmbH.

ZF pays the sum of $12.4 billion in cash for TRW's automotive activities. The combined entity will achieve annual sales of about €30 billion ($38.8 billion) and employ 138.000 persons. The acquisition has been driven by the complementary product portfolio of ZF and TRW: While ZF's stronghold is in the firld of mechatronics for powertrain and undercarriage, TRW has a reputation for radar sensors, advanced driver assistance systems, safety systems and vehicle electronics. With their combined expertise, they hope to benefit from megatrends such as fuel efficiency, tightening safety requirements and autonomous driving - trends that require massive R&D investments. The common denominator is that both companies are technology driven. ZF's and TRW's combined research and development budget amounted to €1.5 billion in 2013.

TRW will be operated as a separate division within the ZF group, the company said in a statement. The focus will be on business growth; in addition the combined company expects synergies at the cost side for due to scale effects in purchasing.

With the TRW takeover, ZF also doubles its revenues in two important markets for the automotive industry: China and the US. ZF currently runs 12 manufacturing locations. Due to TRW's strong position in China, ZF could increase its sales in this country by about 33 %.

ZF's takeover announcement follows a related but complimentary announcement earlier today: ZF Friedrichshafen sold its shares in ZF Lenksysteme (ZFS) to its long-term joint venture partner Bosch. ZFS manufactures steering systems for passenger cars and commercial vehicles, including electric steering systems. Experts assume that ZF took this measure to avoid sanctions from the side of the antitrust authorities. Such issues would have been probable since TRW also has a strong market position in steering systems.

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