Trucking parts supplier Wabco Holdings Inc. on Thursday said it agreed to sell itself to German rival ZF Friedrichshafen in a deal valued at more than $7 billion.
The all-cash deal is for $136.50 per share and represents a 13 percent premium to Wabco's closing price of $120.75 on Feb. 26.
The two companies said the deal, which is expected to close in early 2020, had been unanimously approved by Wabco's board of directors. The deal is contingent on ZF clinching more than 50 percent of Wabco's shares.
Last month, Reuters reported that ZF had held takeover talks with Wabco, as the unlisted company seeks to overhaul its business for an era of self-driving trucks.
Wabco, based in Brussels for tax purposes with its operational headquarters in suburban Detroit, specializes in braking control systems and other safety technologies for commercial vehicles. Last month Wabco reported record annual sales and earnings, posting net income of $394 million on revenue of $3.83 billion. It employs about 16,000 people in 40 countries.
Last year, Wabco invested $20 million to build a 102,000-square-foot headquarters in Auburn Hills, Mich. It's unclear whether ZF will maintain that building or consolidate it with other large operations around suburban Detroit in Livonia and Northville.
Following the acquisition, ZF expects to generate about $44 billion a year in revenue.
ZF CEO Wolf-Henning Scheider said in a statement: “We believe that, together with WABCO, ZF can form the world’s leading integrated systems provider for commercial vehicle technology, creating long-term value and security for its customers, employees and owners.
"For ZF the acquisition of a specialist and leader for commercial vehicle braking systems means adding a stable and growing business segment and enables our existing commercial vehicle division to expand its expertise in vehicle dynamics control.
"This will create the foundation for ZF to offer comprehensive systems for safe and automated mobility solutions for passengers and goods to our customers."
ZF has done large acquisitions in the past and in 2014 bought TRW Automotive for $13.5 billion to expand into the potentially lucrative self-driving car market.
Previously, ZF has said it plans to invest more than 12 billion euros ($13.6 billion) into e-mobility and autonomous driving.
Automotive News, Crain's Detroit Business and Reuters contributed to this report.
