ZF Completes $7 Billion Takeover of Wabco Holdings

ZF Friedrichshafen AG said Friday it has completed its $7 billion acquisition of commercial vehicle technology supplier Wabco Holdings, which will become an independent division of the German company.

Originating from the Westinghouse Air Brake Co. founded nearly 150 years ago, the Wabco name will live on in the aftermarket similar to TRW, which ZF acquired for $12.4 billion in 2015. 

Wabco, which specializes in developing autonomous driving technologies including automatic braking for commercial vehicles, ceased trading on the New York Stock Exchange under the ticker symbol WBC.

CV technology colossus 

The Wabco acquisition further solidifies ZF as a commercial vehicle technology powerhouse. Its combined product portfolio includes conventional and electric drive and chassis components, a suite of sensors, and fully integrated, advanced braking and steering and driver assistance systems.

"Thanks to our perfectly complementary portfolios and competencies, we are able to offer unprecedented solutions and services for manufacturers and fleets globally," ZF CEO Wolf-Henning Scheider said in a statement. "In this way, we are actively shaping the future of the changing transportation industry,"

ZF supplies components to the Class 8 Freightliner eCascadia electric truck scheduled for series production in late 2021. 

It also is working with startup autonomous truck maker TuSimple in a partnership to co-develop production-quality technologies including cameras, LiDAR, radar, and steering. TuSimple could be ZF's customer for a Level 4 autonomous driving system for a commercial vehicle customer it announced at CES 2020 in January.

New division

Wabco will operate as the independent Commercial Vehicle Control Systems division within ZF, becoming the 10th division of the Germany-based technology company. The new division will have about 12,000 employees at 45 locations worldwide and work closely with ZF's existing Commercial Vehicle Technology division,

With the retirement of Wabco Chairman and CEO Jacques Esculier, the new division will be led by Fredrik Staedtler, formerly head of ZF's Commercial Vehicle Technology division.

Long road

ZF and Wabco announced the all-cash deal in March 2019. ZF agreed to acquire all outstanding shares of WABCO for $136.50 per share, placing the value of the deal at $7 billion. Wabco shareholders approved the deal in June 2019.

With the merger, ZF now has 160,000 employees worldwide, with approximately 260 locations in 41 countries. In 2019, ZF had sales of €36.5 billion ($40.5 billion). Wabco had sales of $3.4 billion.

On May 15, the Chinese State Administration for Market Regulation approved the deal, joining German, U.S., and Indian regulatory authorities in greenlighting the merger. The U.S. Department of Justice required the companies to divest Wabco's North American steering components business to win approval for the merger.

Pandemic production

The integration begins amid the coronavirus pandemic, with ZF resuming production at reduced levels next week, spokesman Tony Sapienza said. The commercial vehicle business has been running with intermittent shutdowns because it is deemed an essential business.

"We are closing this acquisition in an unprecedented social and economic situation," Scheider said. "In the long term, this thoroughly prepared acquisition will make us even stronger for the future once we have overcome the immediate effects of the pandemic."

On May 20, ZF added a €1.35 billion ($1.5 billion) credit facility to its existing €3 billion revolving credit facility. The new loan is for 12 months with options for two six-month extensions.