ZF May Raise Bid for TRW

Chassis and powertrain systems supplier ZF Friedrichshafen AG may raise its bid to buy TRW Automotive Holdings Corp., the American maker of automotive safety systems, Bloomberg News reports.

ZF has confirmed an earlier Bloomberg report that it is in talks to acquire TRW. A deal would create a $40 billion (€30 billion) company second among auto suppliers only to Robert Bosch GmbH.

The deal was initially estimated to be worth $11 billion-$12 billion (€8.1 billion-€8.9 billion). Bloomberg sources say ZF is now considering an offer of $13 billion (€9.6 billion) after other banks backed its bid. Both companies have declined to comment on the new report.

Bloomberg's sources estimate ZF can easily borrow as much as $16 billion (€11.8 billion), or four times the combined earnings of both companies before interest, taxes, depreciation and amortization.

Those sources believe ZF and TRW could reach agreement within four weeks. They say both companies would prefer a rapid conclusion to avoid uncertainty among their customers.