Shanghai-listed Zhuzhou Times New Material Technology (TMT) has signed an agreement with ZF Friedrichshafen to acquire its rubber & plastics business unit which will be carved out and transferred into a new company.

The deal is expected to close in the first half of 2014 after regulatory approvals in China and Europe and approval by TMT’s shareholders.

"Against the backdrop of strong consolidation in the rubber and plastics industry, ZF has concluded that the rubber & plastics unit - currently part of ZF’s car chassis technology division - will be better positioned as a standalone company, backed by a long-term strategic investor," ZF said.

The unit will generate sales of about EUR700m in 2013 and has 3,300 employees in nine locations across Europe, North and South America, Asia and Australia.

ZF CEO Stefan Sommer said: "The new owner offers opportunities to the unit we could not have provided within ZF. We are delighted that we have found a strategic partner that follows a long-term strategy, is willing to invest in the business and provides the best solution possible for our employees and customers."

TMT is a leading provider of noise, vibration and harshness (NVH) components and polymer composite materials for the railway, automotive, construction and wind power industry. TMT aims to expand into the global automotive NVH market by making the former ZF unit as one of its core business units and its primary automotive platform globally.

Under new owners, the new company will remain based in Damme, Germany, and will be largely operated and managed autonomously by its existing management team. TMT will maintain all existing production sites and has committed to an extensive set of measures to safeguard employment long term.

“TMT’s future strong investment support for our Rubber & Plastics activities certainly provides us with enhanced opportunities for global business development. Additionally, TMT’s connections in China would help provide our business with much better access to China’s automotive market, the largest and fastest growing market globally,” said Dr. Torsten Bremer, Head of the Rubber & Plastics Business Unit.

ZF and the spun off unit will continue to cooperate closely and will together with TMT explore future cooperation on technology projects in fields such as, for example, electronics, industrial products, heavy truck technologies and axle systems.