Pre-Merger Prep

More Than the Sum of Its Parts

Stefan Sommer ZF Chef Source Helmuth Scham for handelsblatt
Stefan Summer, the ZF chief executive, is firing on all cylinders.
  • Why it matters

    Why it matters

    The new car-parts supplier will be on a level playing field with top dogs Denso and Continental, trailing only Bosch.

  • Facts

    Facts

    • TRW Automotive is global market leader in the area of disc brake systems, electric steering systems and seatbelts.
    • Europe continues to be ZF’s most important market with a turnover of $12.7 billion.
    • The new car part supply titan will have 138,000 employees and a turnover of $37 billion.
  • Audio

    Audio

  • Pdf

Car parts supplier ZF Friedrichshafen is turning 100. And it will be celebrating this milestone with the takeover of American competitor TRW.

Pending antitrust approval, the takeover will be completed in early 2015, with good momentum and a 6.7 percent increase in sales to €18 billion ($22.1 billion), according to preliminary figures for 2014.

The acquisition of TRW will give ZF Friedrichshafen, which is based in southern Germany, combined global sales of roughly €30 billion, putting the parts maker on equal footing with industry rivals Denso of Japan and Germany’s Continental and Bosch.

The new supply giant will boast 138,000 employees.

“It’s important to us to bring together the best of both worlds to take advantage of this unique strategic opportunity. ”

Stefan Sommer, ZF Chief Executive

The combination of ZF and TRW is poised to create a global giant. ZF produces mainly vehicle drive systems and undercarriages. TRW, aside from being a global market leader in disc brakes, electric steering systems and seatbelts, will bring niche technology ZF lacks from airbags to collision sensors.

Also important are TRW’s electronic parts, which are vital to modern car-safety systems and play a key role in connected driving.

“It’s important to us to bring together the best of both worlds to take advantage of this unique strategic opportunity,” ZF Chief Executive Stefan Sommer said.

The merger is a mammoth project for ZF, but the company is well positioned financially, as preliminary 2014 business figures show. Sales rose globally, even amid weakness in Brazil and Eastern Europe, where revenue fell by a fifth to €550 million ($676 million).


Video: ZF 8-speed automatic transmission engine used in BMW motorsport.

Things are running comparatively smoothly in the most significant markets. The company earned 20 percent more than a year ago in its Asian-Pacific region, which also includes the booming Chinese market, to reach a total of €3.6 billion ($4.4 billion).

Turnover in the United States rose by 20 percent to €3.7 billion ($4.6 billion), excluding TRW.

Europe is still the most important market for ZF. The company was able to boost turnover in Europe by 5 percent to €10.3 billion ($12.7 billion) – in spite of stagnating car sales.

However, Mr. Sommer, the chief executive, said growth was largely the result of currency conversion effects. The German parts maker plans to make final year-end figures public in April.

By then, ZF’s transformation to a global parts giant could be well under way.

 

Lukas Bay is an online editor on the Handelsblatt companies desk.  To contact the author: bay@handelsblatt.com.

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