ZF Friedrichshafen, moving to acquire TRW Automotive Holdings, has been told by lenders that financing is available for a higher all-cash bid which could value the US company at as much as US$13bn, Bloomberg News reported.
ZF, working with Citigroup, is exploring a proposal that values TRW at between $110 to $112.50 a share, Bloomberg sources said. Morgan Stanley and several European banks are also advising the company and financing the deal, the sources said.
Talks between the two sides have accelerated though no deal has been reached and the companies are still negotiating on the price, a source said.
TRW last week confirmed it had received a preliminary and non-binding proposal to acquire the business, although it insisted it was evaluating the possibility "as well as other strategic alternatives."
ZF had initially valued TRW at about $11bn to $12bn, a Bloomberg source said last week.
Now that talks are public, TRW and ZF could reach an agreement in three to four weeks to prevent management disruption and allay concerns among automakers that dislike uncertainty with larger suppliers, the sources for today's report said. ZF CEO Stefan Sommer is planning to brief employees about the logic of the bid on Friday, another source told Bloomberg.
ZF’s view is that a larger parts supplier, providing more components to a broader global automaker base, can better withstand pricing pressure from customers like Fiat or General Motors, Bloomberg sources noted.