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By Soyoung Kim and Edward Taylor
NEW YORK/FRANKFURT Aug 4 German auto parts
maker ZF Friedrichshafen AG is considering selling its steering
business as part of its proposed acquisition of U.S.-based TRW
Automotive Holdings Corp, to resolve expected antitrust
issues, people familiar with the matter said on Monday.
ZF makes steering systems through ZF Lenksysteme GmbH, its
joint venture with Robert Bosch GmbH. ZF has discussed exiting
the joint venture by selling its interest to the bigger German
rival, the people said.
The joint venture, whose ownership is split equally between
the two companies, had annual revenue of 4.11 billion euros
($5.5 billion) in 2013, according to company filings.
TRW's steering business, meanwhile, posted revenue of $2.7
billion for 2013, or 15.5 percent of group sales. It has cited
strong demand for its electric power-steering systems as a
driver of future growth.
ZF is hoping to have a divestiture plan in place before it
strikes a deal to buy TRW, one of the main remaining issues to
resolve as merger talks have reached an advanced stage, the
people said, asking not to be named because the matter is not
Representatives for ZF, TRW and Bosch declined to comment.
ZF is in advanced discussions to buy TRW for nearly $12
billion to create an automotive supply power house focused on
powertrain and car safety components, Reuters reported last
If completed, the merger would create one of the world's
largest automotive suppliers with combined annual revenue
exceeding $40 billion. ZF, a major provider of steering systems
and powertrains, would get a leading maker of automotive safety
products, such as brakes and air bags.
ZF, which is lining up roughly 10 billion euros in debt
financing, is in talks to pay around $105 per TRW share, Reuters
reported, just above its current stock price and valuing the
company at close to $12 billion based on shares outstanding.
Discussions are continuing and the two sides have yet to
negotiate a final price and other terms, people familiar with
the matter said. They added the companies hoped to reach an
agreement in a matter of weeks but there was no guarantee one
would be struck within that timeframe.
Shares of TRW were trading at around $102 on the New York
Stock Exchange on Monday, near all-time highs after surging on
expectations of a takeover in recent weeks.
ZF and Bosch established their steering joint venture in
1999. The venture has 18 locations worldwide in eight countries
with more than 13,000 employees, according to its website.
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 Motor Co
and General Motors Co.
The company, which had sales of $17.43 billion last year,
counts Volkswagen AG as its largest customer and
gets about 40 percent 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 16.84 billion euros ($22.6 billion).
(Additional reporting by Andreas Cremer and Ilona Wissenbach in
Frankfurt, Laurence Frost in Paris; Editing by David Gregorio)