The owner of a North Charleston plant that makes brakes for commercial trucks is being sold to a German company with several South Carolina locations in a deal fueled by the anticipated shift to self-driving vehicles.
Switzerland's Wabco Holdings Inc., which has a 150-year history in the U.S., said Thursday that it will combine with the much larger ZF Friedrichshafen AG, which supplies passenger car manufacturers with gear boxes, transmissions and chassis products.
The all-cash sale is valued at $7 billion. It's expected to close in early 2020 if approved by shareholders and industry regulators.
ZF has been on the lookout for an acquisition or strategic partner that would help it diversify and expand further into the emerging areas of autonomous driving and vehicle connectivity. Wabco fit the bill based on its past work developing advanced driver assistance systems for trucks and trailers.
“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,” the German company said in a statement.
Wabco CEO Jacques Esculier described the transaction as being "the right combination at the right price at the right time" for his publicly traded company.
"We have a history of successful collaboration with ZF, including prototyping industry-first technologies, and the strategic fit between our two companies is compelling," he said.
Esculier also predicted that future growth opportunities in the rapidly evolving automotive industry "will be more challenging" to seize because of new competitors, "including new entrants from outside the sector, able to bring unprecedented resources to the table."
“Considering these factors, we strongly believe this is the appropriate moment to be joining forces with ZF, providing access to critical technology and the global size and scale to de-risk the return on investment required as the industry transforms," he said.
ZF previously sought to purchase Wabco about two years ag. The bid unraveled over concerns about the amount of debt the buyer would have to take on.
Wabco set up shop in North Charleston in 1998. About two years ago, it relocated from Leeds Avenue to a new $20 million disc-brake plant near Patriot Boulevard. The bulk of its customers are large truck manufacturers, such as Daimler and Volvo.
The company also makes air compressors locally under a joint venture with diesel engine giant Cummins.
Now based in Bern, Wabco is a direct descendant of the Westinghouse Air Brake Co., a Pittsburgh business founded in 1869 that was a pioneer in developing braking systems for trains and other heavy transport vehicles. Last year, the Swiss company reported sales of $3.8 billion. It has more than 16,000 employees in 40 countries.
Wabco's proposed suitor has a payroll of about 146,000 at 230 locations in 40 countries with annual revenue of about $41 billion. ZF operates three South Carolina manufacturing plants, two chassis system plants in Duncan and a transmission factory in Fountain Inn.