CCI approves the acquisition of 100 per cent shareholding of WABCO Holdings Inc. by ZF Friedrichshafen AG, under Section 31(1) of the Competition Act, 2002.
Story by: Deepti Thore
The Proposed Transaction subject to the carrying out of modifications proposed by ZF Friedrichshafen AG(ZF), under Regulation 25 (1A) of the Competition Commission of India (Procedure in regard to the transaction of business relating to combinations) Regulations, 2011 was recently approved. After making public the definitive merger plans last year in March, ZF acquired 100 per cent shares of WABCO Holdings Inc (WABCO) as per a combination notice filed with the Competition Commission of India (CCI) in February 2020. Aiming to help ZF sustain its expertise in autonomous-driving technologies, the merger is part of ZF’s Next-Generation Mobility strategy. Set to acquire all outstanding shares of WABCO for USD 136.50 per share in an all-cash transaction for an equity value of over USD Seven billion as per the agreement, ZF, on the back of this merger is ready to set its foot in the commercial vehicle braking solutions for the first time.
With around 16,000 employees in 40 countries, WABCO with its legacy in braking control systems, technologies and services that improve safety, efficiency and connectivity of commercial vehicles is also known for its pneumatic suspension systems, transmission automation controls, as well as aerodynamics, telematics, and fleet management solutions among others. ZF, on the other hand, has a workforce of 146,000 with approximately 230 locations in over 40 countries as a global leader in driveline and chassis technology as well as active and passive safety technology. In order to proceed, it was important that both the companies sell Wabco’s steering components business, R.H. Sheppard Co Inc., acquired by Wabco in 2017, both ZF and Wabco being only steering gears suppliers for North America. This acquisition could only happen with the joint approval of ZF’s Management Board and Supervisory Board, along with WABCO’s Board of Directors. CCI approved this transaction subject to further modifications proposed by ZF.
Proceeding with the acquisition via its indirect wholly-owned subsidiary Verona Merger Sub Corp, a Delaware corporation, ZF, will get sole control over WABCO. Hoping to add stability and grow its business segment, ZF with the help of this merger plans to expand its existing expertise in vehicle dynamics control in the commercial vehicle division claim sources. Talking about the merger Wolf-Henning Scheider, CEO, ZF said, “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.” Jacques Esculier, Chairman and CEO of WABCO averred, “Joining forces with ZF will create a leading global technology company well-positioned to capitalise on future demand for autonomous, efficient and connected commercial vehicles.” The combined efforts of both companies for commercial vehicle technology is expected to generate approximately Euro 40 billion. Offering comprehensive systems for safe and automated mobility solutions for passengers and goods, ZF is all set to create the foundation in the interest of its owners, the Zeppelin Foundation and the Dr Jürgen and Irmgard Ulderup Foundation, in turn, strengthening ZF to be more sustainable. Of the opinion that the ZF transaction will offer a convincing strategic fit to advance the requirements of our industry, Jacques believes that the merger will provide certainty of value and liquidity to Wabco’s shareholders.
With an objective to develop and deliver technology solutions for reducing emissions and increase road safety, ZF with this planned strategic acquisition of WABCO is looking to further accelerate the development of new technologies to enable autonomous commercial vehicle functions, expected to make ZF less dependent on the economic cycle of the passenger car industry. Following the acquisition, customers of both companies will have a partner in ZF who can offer them a fully integrated system approach, new drive systems for E-Mobility and autonomous driving functions. In the past, ZF and Wabaco have jointly developed the Evasive Manoeuvre Assist system, combining Wabco’s braking, stability and vehicle dynamics control systems for trucks with ZF’s active steering technology. Konstantin Sauer, CFO, ZF, said, “With the successful integration of TRW, ZF has significantly reduced its debt levels. In fact, we overachieved in delivering our debt reduction targets.” With Wabco claimed to have a strong cash flow profile, ZF is confident that the acquisition will support the implementation of their strategy, he concluded. ACI
ZF gets added to OMP
Post the announcement of Open Manufacturing Platform (OMP) in 2019 by the BMW Group and Microsoft, ZF joins the alliance to enable faster and more cost-effective innovations in the manufacturing industry. Founded as an independent initiative under the umbrella of the Joint Development Foundation, a part of the Linux Foundation, the OMP is an alliance which helps manufacturing companies accelerate innovation at scale through cross-industry collaboration, knowledge and data sharing as well as access to new technologies. ZF along with other popular names including Anheuser-Busch InBev, BMW Group, Bosch Group, Microsoft is named as the OMP steering committee member. The latter have approved a number of projects based on areas including IoT connectivity, semantic data models, Industrial IoT reference architecture, and core services for Autonomous Transport Systems (ATS). They have teamed up to accelerate manufacturing innovation at a good scale thus contributing to the development of smart-factory solutions across the sector. Working actively for enhancing Industry 4.0 maturity towards smart factories, ZF along with other OMP members is working towards standardising industrial data models to accelerate analytics and machine learning scenarios by unlocking data stored in proprietary systems. For ZF, OMP is a key enabler to further develop their digital manufacturing capabilities to reach the next level of Industry 4.0 maturity confirmed Jürgen Sturm, Head of IT, ZF.
