BorgWarner to Take Over Delphi Technologies

BorgWarner Inc. (BW) and Delphi Technologies PLC have recently reached an agreement on a final transaction agreement under which BW will take over Delphi Technologies (DT) in an all-stock transaction that estimates assets of the latter at about $3.3 bln.

It is expected that the deal will strengthen BW’s potential in the field of electrified automotive technologies. Purchasing of DT goes in line with BW’s shifting towards the propulsion market of the future. Upon sealing of the acquisition deal, current BW stockholders are reported to possess about 84% of the combined company, while DT will receive the remaining part of the company stock.

In budget year 2019, BW and DT claim that they accumulated $10.17 bln and $4.36 bln of net sales, accordingly. The combined company is assumed to become one of the top suppliers of vehicle propulsion systems worldwide, providing manufacturers and the aftermarket with highly-efficient and more advanced solutions.

According to BW officials, this promising deal is the next stage in implementation of the company’s development strategy, reinforcing its position in electrified propulsion as well as other automotive segments. DT’ solid experience in power electronics is a fine addition to BW’s current solutions. Joining forces makes it possible for the combined company to deal with challenges related to the global automotive electrification in the most efficient manner. DT’s management team, in turn, puts high hopes on the consolidation of technical capabilities, as both companies share a strong determination to tackle today’s and tomorrow’s challenges of the automotive industry.

Both companies' engine and transmission divisions are considered by experts to be in decline, as car manufacturers actively invest in the development of environmentally-oriented types of vehicles (hybrid, electric). Compelled by governments around the world to enhance fuel efficiency and reduce harmful emissions, carmakers use significant financial resources to electrify powertrains for their future vehicle lines. The industry has also been hit by sluggish economic growth and the U.S. trade war with China. Thus, it is no wonder that some companies resort to mergers & acquisitions to remain competitive on the automotive market.

The acquisition will be beneficial for both companies strategically as well as financially. Potential customers of the reinforced company will be provided with a wide range of advanced solutions in the field of power electronics.

BW analytics hope the combined company to achieve run-rate cost synergies of about $125 mln by 2023 thanks to cost-effectiveness in administrative and procurement operations. The takeover deal is planned to be finalized in the 2-nd half of 2020, once it is approved by DT’s stockholders and gets necessary regulatory approvals.