ZF in “Advanced” Talks to Acquire TRW

ZF Friedrichshafen AG is in close to a deal to buy TRW Automotive Holdings Corp. for around $12 billion (€9 billion), according to unnamed sources cited by Reuters.

TRW and ZF currently generate about 40% and 50%, respectively, of their revenue in Europe.

Reuters says the "advanced" acquisition discussions center on a bid that would pay around $105 (€73.40) per share for the American company, which is headquartered outside Detroit. ZF's offer would equal about 7.5 times TRW's estimated 2014 earnings before interest, taxes, depreciation and amortization. Reuters says such a deal would be the supplier industry's largest takeover in seven years.

Citigroup and Deutsche Bank, which are advising ZF, reportedly are ready to provide a bridge loan facility worth roughly $10 billion (€7.5 billion) for the bid. Goldman Sachs Group is supplying strategy counseling to TRW.

None of the players is commenting. Reuters' sources say the two companies haven't settled on several terms, including a final price.

Merging TRW and privately held ZF would create a supplier company second in revenue only to Robert Bosch GmbH. The combination would blend TRW's expertise in safety systems and electronics with ZF's powertrain and chassis businesses.