admin With a deal uniting two auto suppliers, BorgWarner Inc. accepted to acquire Delphi Technologies Plc for about $1.5 billion in an all-stock for the industry’s transformational shift to hybrid and electric vehicles. According to a statement on Tuesday and terms of the deal, Delphi Technologies values about $3.3 billion including debt. Its shares flowed a record 66% to $16.30, the highest intraday since September. BorgWarner leaped as much as 8.4% to $35.14, the lowest since October
The suppliers have been investing in products automakers will need for hybrid models that use both gasoline engines and battery power, as well as fully electric vehicles and both Delphi’s and BorgWarner engine and transmission businesses are expected to enter a period of decline as carmakers amalgamate to electric cars.
According to this deal, Delphi Technologies stockholders will receive 0.4534 BorgWarner shares for each Delphi Technologies share held which would represent a premium of about 77% to Delphi Technologies’ closing price on Monday.
Using Monday’s closing prices, that implies that BorgWarner is paying about $17.39 per share for Delphi, valuing Delphi’s equity at about $1.5 billion. That’s a big premium: Delphi’s shares closed at $9.80 on Monday.
BorgWarner will also assume Delphi’s debt. Delphi had long-term debt of $1.47 billion as of Sept. 30. Add in short-term obligations, and that gives it a total enterprise value of $3.3 billion.
This deal is the BorgWarner Inc, Michigan-based company’s biggest acquisition to the date, crossing its purchase of Remy International Inc. in 2015 for about $950 million.
The statement indicates, BorgWarner stockholders would own about 84% of the combined company, while current Delphi Technologies owners would hold 16% which in turns cost savings of about $125 million by 2023 according to the company.
BorgWarner’s biggest customers are Ford Motor Co. and Volkswagen AG, while Delphi Technologies’ are Daimler AG and General Motors Co.
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