As the trend of automotive electrification intensifies, automotive power parts companies are expanding their business through mergers and restructurings to strengthen their market position in the face of change. U.S. auto parts giant Borg Warner has reached a final deal to buy Delphi Technologies for $3.3 billion ($22.9 billion), Reuters reported.
Terms of the agreement approved by the boards of the two companies indicate that Delphi shareholders will receive 0.4534 shares of BorgWarner common stock per share. Upon completion of the deal, BorgWarner’s existing shareholders are expected to own about 84 per cent of the combined company, while Delphi’s existing shareholders will own about 16 per cent. The combined company will operate as BorgWarner and will be headquartered in Auburn Hills, Michigan.
BorgWarner said the deal would give the company a number of advantages to complement BorgWarner’s hybrid and electric vehicle powersystems products. On the one hand, it will help expand the company’s product portfolio, capabilities and scale in electrical electronics, and on the other will help to consolidate its leadership position in electrical driving systems and strengthen its position in the internal combustion engine, commercial vehicles and aftermarket business. In the future, the combined companies will launch a more comprehensive portfolio covering internal combustion engines, hybrid sand and automotive electric systems.
The combined company will provide customers with a full range of integrated or independent electrical electronics (including high-voltage inverters, converters, in-vehicle chargers and battery management systems), according to a statement from Delphi Technologies.
According to reports, BorgWarner’s sales in 2019 will reach $10.168 billion, Delphi sales of $4.4 billion, and the merger will reach $14.5 billion. Automakers and parts suppliers are accelerating alliances to cope with a competitive market environment while cutting costs to create their own strengths, and the trend towards electrification is the catalyst for consolidation.