German Auto-Parts Maker, ZF Friedrichshafen AG, Shows Interest in TRW


ZF Friedrichshafen AG, German automotive company, has shown interest in the U.S. based TRW Automotive Holdings Corp. The move could create an automotive powerhouse better placed to compete in an industry that has dedicated much effort in producing autonomous cars and enhancing the safety of trucks and cars.

The offer, disclosed on Thursday, could see the emergence of an automotive dealer with annual sales of more than $40 billion. According to Automotive News, Robert Bosch GmbH of Germany and Denso Corp. are the largest players in the industry with annual revenue of $37 and $34 billion respectively. A ZF’s spokesperson did not disclose the logic behind the offer; details about the terms and the deal’s timing were also scanty.

TRW Automotive said it is considering the offer as well as other alternatives though it did not disclose its options. Stocks in the Livonia, Mich., company rose by about 12 % to a high of $101.98. The rise saw the TRW’s market value jump to $11 billion. TRW manufacture car safety components such as air bags and brakes for car makers around the globe. It is seen as healthier among U.S. suppliers due to its much attention on driver-assistance technology. Over the past two years, its share has doubled.

ZF Friedrichshafen AG is best known for making components that are critical to the operations of automobiles such as transmissions and steering wheels. Zeppelin Foundation owns about 94% of the company. It was started more than 100 years ago by Ferdinand von Zeppelin.

Morgan Stanley analysts, in a note to investors, said that the two companies have very few overlapping products and therefore a tie-up of the two could make them have significance influence in the industry. “By bringing transmission, drivetrain, chassis and suspension know-how into the mix, there are few parts of the car that will be outside the purview of a ZF+TRW combination,” said the note.

Many car makers around the world are racing to introduce autonomous driving features in their cars. Some have said that they will introduce self-driving cars in the near future though such cars would face infrastructure and traffic related challenges.

Autonomous driving features have caught the attention of other players outside the automobile industry who see the increased sophistication as a potential source of revenue in future. Google is probably the best example; it is currently testing self-driving cars.

TRW and ZF are among the automobile companies which for many years have developed components to better safety, comfort and economy.