Acquisition to enhance power electronics products, capabilities, and scale, which is consistent with BorgWarner’s Balanced Propulsion strategy
BorgWarner Inc. and Delphi Technologies PLC have announced that they have entered into an agreement under the former will acquire the latter in an all-stock transaction. The acquisition, which values Delphi Technologies’ enterprise value at about $ 3.3 bn is said to be able to strengthen BorgWarner’s power electronics products, capabilities and scale. BorgWarner noted that acquiring Delphi Technologies is consistent with its evolution towards the propulsion market of the future and would enable the company to maintain flexibility across combustion, hybrid, and electric propulsion (C-H-E).
The acquisition of Delphi Technologies by BorgWarner is expected to close in the second half of 2020, subject to approvals. Following closure of the acquisition, the combined company will be led by Frédéric Lissalde, President and CEO, BorgWarner, and Kevin Nowlan, CFO, BorgWarner, and will operate as ‘BorgWarner.’ The combined company will be headquartered in Auburn Hills, Michigan, US.
The terms of the agreement, which have been approved by the boards of directors of both companies, entitles Delphi Technologies stockholders to receive a fixed exchange ratio of 0.4534 shares of BorgWarner common stock per Delphi Technologies share. Upon closing of the transaction, current BorgWarner stockholders are expected to own about 84 % of the combined company, with current Delphi Technologies stockholders owning the rest.
In fiscal 2019, BorgWarner and Delphi Technologies estimate that they have generated net sales of $ 10.17 bn and $ 4.36 bn, respectively. Once the transaction is completed, the combined company is expected to be one of the leading pure-play propulsion companies globally, serving light and commercial vehicle manufacturers, and the aftermarket. The combined company would offer a unique, more comprehensive portfolio of industry-leading propulsion products and systems across combustion, hybrid and electric, resulting in greater content per vehicle relative to BorgWarner today, it said.
Frédéric Lissalde, President and CEO, BorgWarner, said this exciting transaction represents the next step in the company’s balanced propulsion strategy. It will strengthen the position of BorgWarner in electrified propulsion, as well as its combustion, commercial vehicle and aftermarket businesses, he added, Lissalde further said that Delphi Technologies will bring proven leading power electronics technologies, talent, and scale that will complement our hybrid and electric vehicle propulsion offerings. “As a combined company, we look forward to delivering enhanced solutions to our customers while driving increased value for our stockholders…We are confident that together we will be able to move faster to address market trends toward electrification,” he added.
This is a compelling transaction that the company is confident will deliver clear benefits to its stakeholders, noted Richard F Dauch, CEO, Delphi Technologies. He said the portfolio of Delphi Technologies is highly-complementary to BorgWarner’s, and together the companies plan to create a pioneering propulsion technologies company uniquely equipped to serve OEMs and aftermarket customers around the world.