September 15, 2014 / 6:51 AM / 4 years ago

Bosch to buy remaining stake in ZF's steering unit

FRANKFURT (Reuters) - German car parts maker ZF Friedrichshafen [ZFF.UL] agreed to sell its steering systems business to Robert Bosch [ROBG.UL], a deal that paves the way for ZF to buy U.S.-based TRW Automotive Holdings Corp. TRW.N.

Bosch on Monday said it increased its stake in ZF Lenksysteme Gmbh to 100 percent from 50 percent, declining to disclose financial terms of the deal. ZF Lenksysteme (ZFLS) has approximately 4.1 billion euros ($5.3 billion) in sales.

Wolf-Henning Scheider, head of Bosch’s auto division, said ZF Lenksysteme complemented Bosch’s other businesses. “Until now we knew how to step on the gas and how to brake. Now we can also steer,” he told journalists on a conference call.

Bosch signaled it had no objections to helping rival ZF clear antitrust hurdles to pursue a bigger deal with United States based rival TRW TRW.N.

If completed, the ZF-TRW merger would create one of the world’s largest automotive suppliers with combined annual revenue exceeding $40 billion.

“ZF is also a large customer of ours,” Bosch Chief Executive Volksmar Denner said when asked why Bosch was potentially helping a major competitor bulk up.

Bosch hopes to complete the transaction by early 2015, pending regulatory approval, Denner said. It plans to fully integrate the steering business into its automotive division, keeping all 13,000 staff.

TRW, based in Livonia, Michigan, makes airbags, electronics, and braking and steering equipment for cars globally and sells to nearly all major automakers including Ford Motor Co (F.N) and General Motors Co (GM.N).

In early July, ZF said it was in early stage talks to acquire U.S.-based TRW Automotive Holdings Corp.

ZF stopped short on Monday of confirming the deal was a prerequisite to a broader combination with TRW.

Talks are now at an advanced stage in a takeover valuing TRW at nearly $12 billion, according to people familiar with the matter.

ZF, which already helps carmakers develop hybrid-powered drivetrains - which connects the engine to the wheels - decided to start talks with TRW after an analysis of which skillsets they wanted to acquire between now and 2025.

Reporting by Edward Taylor; Editing by Ludwig Burger and Georgina Prodhan

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