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TRW Receives Acquisition Offer from German Co.


Trades from $3

TRW Automotive Holdings Corp. has received a preliminary, non-binding proposal of acquisition. Though the company did not name the bidder, some sources reveal Germany’s ZF Friedrichshafen AG as the potential buyer.

Based in Friedrichshafen in southern Germany, ZF Friedrichshafen produces transmissions, axles and other parts for European and American vehicles. ZF Friedrichshafen has valued TRW’s assets at around $11–$12 billion. However, the specific purchase price has not been disclosed.

TRW is evaluating the proposal along with other strategic alternatives which will enhance shareholders value. However, the evaluation process is not restricted to any timeframe. In the meantime, the company will continue to operate under its existing business model. Notably, Goldman Sachs Group, Inc. (GS - Analyst Report) will take up the role of a financial advisor for the company.

TRW reported a 19.9% increase in its first-quarter 2014 earnings to $1.81 per share from $1.51 (all excluding special items) a year ago. Also, earnings per share exceeded the Zacks Consensus Estimate of $1.65.

Revenues in the quarter grew 5% to $4.4 billion driven by strong demand for TRW’s innovative technologies, increased vehicle production volumes and a positive impact of currency translation, partly offset by some existing business exits in the North American brake component and assembly operations. Revenues beat the Zacks Consensus Estimate of $4.31 billion.

TRW is a leading manufacturer of advanced technology products and services for the automotive markets. Headquartered in Michigan, the company operates across 24 countries through its subsidiaries. These operations primarily involve design, manufacture and sale of active and passive safety-related products. TRW currently retains a Zacks Rank #2 (Buy).

Other well-performing automobile stocks worth considering include China Automotive Systems Inc. (CAAS - Snapshot Report) and Wabash National Corp. (WNC - Snapshot Report) . Both the companies sport a Zacks Rank #1 (Strong Buy).