BorgWarner Strengthens Electrification Strategy With Eldor Deal, Will Aid In Resource Optimization: Analyst

Oppenheimer analyst Noah Kaye reiterated an Outperform rating on the shares of BorgWarner Inc BWA.

BWA agreed to acquire the Electric Hybrid Systems (EHS) business segment of Eldor for €75 million.

Headquartered in Italy, Eldor's EHS segment includes on-board chargers (OBCs), DC/DC converters, and integrated high voltage boxes, said the analyst.

BorgWarner highlighted EHS's capabilities in 400V and 800V on-board chargers and high-frequency DC/DC converter technology as core additions.

BWA expects Eldor's EHS business to generate €25 million of revenue for FY23. Longer term, revenues from the business is expected to be approximately €250 million in 2027.

The analyst views the acquisition as consistent with BWA's electrification strategy laid out at the Investor Day, with power electronics a key plank of sustainable growth.

The analyst looks for potential favorable re-rating as the PHIN spin approaches (July 5) and anticipate further electrification M&A ahead.

Price Action: BWA shares are trading lower by 4.18% at $46.56 on the last check Tuesday.