ZF-TRW talks mean industry megadeals are possible

Somehow, it always seems like a good time for mergers and acquisitions, at least as far as Wall Street is concerned.

In times of recession, companies are on the lookout for bargains: wounded suppliers that are struggling to maintain cash flow as vehicle production plunges.

And in times of plenty -- like now -- profitable suppliers want to put their cash to work, perhaps by expanding their product lineup or gaining a new customer or entering a new region.

ZF’s proposed acquisition of TRW has put the entire industry on notice that mega-deals are possible.

Are other deals in the works? One industry analyst recently speculated that Delphi Plc would make a nice target for Samsung.

Which is all very well, but does Delphi actually want to be acquired? Or would Delphi prefer to be the acquirer? Jeff Owens, Delphi’s chief technical officer, offered a few answers today on the sidelines of the 2014 Management Briefing Seminars.

The active safety segment is likely to undergo consolidation as smaller suppliers with key technologies get snapped up by larger rivals, Owens said.

Delphi, which produces radar, cameras, airbags and other safety gear, has been able to fill gaps in its product portfolio by negotiating licensing agreements with other companies, Owens noted.

If Delphi buys another company, it will be a bolt-on, Owens said. The company does not seek to make a “transformational” acquisition like ZF’s proposed acquisition of TRW Automotive.

Is Delphi itself an acquisition target? Owens shrugged. He said he doesn’t expect a major player in consumer electronics — such as a Samsung, for example — to enter the automotive market by making a big acquisition.

It takes time for automotive investments to pay off, and most players in consumer electronics don’t have the patience.

But would another automotive giant consider a big acquisition? I guess we’ll have to wait and see.

You can reach David Sedgwick at dsedgwick@crain.com

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