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March 28, 2019

ZF signs definitive agreement to acquire Wabco

ZF Friedrichshafen AG has announced that it has entered into a definitive agreement to acquire Wabco for US$136.50 per share.

By Sam Duke

ZF Friedrichshafen AG has announced that it has entered into a definitive agreement to acquire Wabco for US$136.50 per share. The planned acquisition has been approved by ZF's Management Board and Supervisory Board and Wabco's Board of Directors. Together, ZF says it and Wabco will form a leading global integrated mobility systems provider for commercial vehicles, creating added value for ZF's commercial vehicle customers. The combined company will have sales of approximately EUR40bn.

Wabco is a global supplier of braking control systems for commercial vehicles. Its products and services include integrated braking systems and stability control, air suspension systems, transmission automation controls, as well as aerodynamics, telematics, and fleet management solutions. Wabco, which is listed on the New York Stock Exchange (NYSE), generated EUR3.3bn in revenues in 2018 and has some 16,000 employees in 40 countries.

Wolf-Henning Scheider, CEO of ZF, said: "We believe that, together with Wabco, ZF can form the world's leading integrated systems provider for commercial vehicle technology, creating long-term value and security for its customers, employees and owners. For ZF the acquisition of a specialist and leader for commercial vehicle braking systems means adding a stable and growing business segment and enables our existing commercial vehicle division to expand its expertise in vehicle dynamics control. This will create the foundation for ZF to offer comprehensive systems for safe and automated mobility solutions for passengers and goods to our customers. This is also in the best interest of our owners, the Zeppelin Foundation and the Dr. Jürgen and Irmgard Ulderup Foundation, as the transaction will result in a sustainable strengthening of ZF."

Jacques Esculier, Chairman and CEO of Wabco, said: "Joining forces with highly respected ZF will create a leading global technology company well positioned to capitalise on future demand for autonomous, efficient and connected commercial vehicles. We have a long history of successful collaboration to develop innovative technologies with ZF with both companies sharing an uncompromising drive for excellence, passion for innovation, and exceptional customer focus."

The planned acquisition is part of ZF's Next Generation Mobility strategy and will expand the company's expertise to include commercial vehicle braking solutions for the first time. ZF expects that automated driving functions will primarily be implemented for commercial vehicles and in areas with low complexity and traffic (e.g. factory sites, airports, agriculture). The combination of both businesses is expected to further accelerate the development of new technologies to enable autonomous commercial vehicle functions, making ZF less dependent on the economic cycle of the passenger car industry.

Dr. Konstantin Sauer, CFO of ZF, said: "The intended strategic acquisition of Wabco comes at a good time for ZF. Following the successful integration of TRW, ZF has significantly reduced its debt levels. In fact, we overachieved in delivering our debt reduction targets. Wabco is a healthy and growing company with a strong cash flow profile that makes it a seamless fit with ZF and supports the implementation of our strategy."

The transaction is subject to regulatory approvals, other customary closing conditions and shareholder approval with more than 50 percent of WABCO's outstanding shares. ZF expects to close the transaction in the beginning of 2020.

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