BorgWarner Buying Delphi Technologies For $3.3 Billion: Details About The Deal You Should Know

By Noah Long ● Jan 30, 2020
  • BorgWarner recently announced it is buying Delphi for $3.3 billion. These are the details about the deal.

BorgWarner recently announced it entered into a definitive transaction agreement under which BorgWarner will acquire Delphi Technologies in an all-stock transaction that values Delphi Technologies’ enterprise value at approximately $3.3 billion.

This acquisition will strengthen BorgWarner’s power electronics products, capabilities, and scale. And combining with Delphi Technologies is consistent with BorgWarner’s goal of growing in the propulsion market of the future and would enable BorgWarner to maintain flexibility across combustion, hybrid, and electric propulsion (C-H-E).

As part of the agreement — which has been approved by the boards of directors of both companies — Delphi Technologies stockholders will receive a fixed exchange ratio of 0.4534 shares of BorgWarner common stock per Delphi Technologies share. And upon closing of the transaction, current BorgWarner stockholders are expected to own approximately 84% of the combined company while current Delphi Technologies stockholders are expected to own approximately 16%.

Last year, BorgWarner and Delphi Technologies estimate that they generated $10.17 billion and $4.36 billion of net sales, respectively. And following the close of the transaction, the combined company is expected to be one of the leading pure-play propulsion companies globally, serving light and commercial vehicle manufacturers and the aftermarket.

The combined company is going to offer a unique and more comprehensive portfolio of industry-leading propulsion products and systems across combustion, hybrid and electric thus resulting in greater content per vehicle relative to BorgWarner today.

“This exciting transaction represents the next step in BorgWarner’s balanced propulsion strategy, strengthening our position in electrified propulsion as well as our combustion, commercial vehicle and aftermarket businesses,” said Frederic Lissalde, President and CEO of BorgWarner. “Delphi Technologies will bring proven leading power electronics technologies, talent, and scale that will complement our hybrid and electric vehicle propulsion offerings. As a combined company, we look forward to delivering enhanced solutions to our customers while driving increased value for our stockholders.”

Delphi Technologies is bringing industry-leading power electronics technology and talent to the table along with an established production, supply, and customer base. And the combined company will offer customers a suite of integrated and standalone offerings of power electronics products such as high voltage inverters, converters, on-board chargers, and battery management systems along with capabilities like software, systems integration, and thermal management.

“This is a compelling transaction that we are confident delivers clear benefits to our stakeholders,” added Rick Dauch, CEO of Delphi Technologies. “Delphi Technologies’ portfolio is highly complementary to BorgWarner’s, and together we plan to create a pioneering propulsion technologies company uniquely equipped to serve OEMs and aftermarket customers around the world. BorgWarner’s team shares our focus on addressing today’s and tomorrow’s challenges, and the combination will create exciting opportunities for our employees. We also expect our stockholders will benefit from the opportunity to participate in the future growth and upside potential of the combined company.”

Plus Delphi Technologies’ combustion propulsion products complements BorgWarner’s innovative portfolio — which is focused on clean technologies to increase efficiency and performance of modern combustion vehicles. And adding Delphi Technologies’ commercial vehicle and aftermarket business will lead to more balance across light vehicles, commercial vehicles, and the aftermarket.

BorgWarner is expecting the combined company to realize run-rate synergies of about $125 million by 2023 driven primarily by SG&A and procurement savings. And these savings are incremental to Delphi Technologies’ and BorgWarner’s existing cost reduction plans. And BorgWarner expects significant long-term revenue synergies primarily from the opportunity to offer more integrated electrified products thus creating further value for the combined company’s stockholders.

After the closing of the deal, the combined company will be led by Lissalde and BorgWarner’s CFO Kevin Nowlan. The combined company will be headquartered in Auburn Hills, Michigan.

BorgWarner also announced its Board of Directors authorized a share repurchase program of up to $1 billion to be executed over the next three years. This transaction is expected to close in the second half of 2020 subject to approval by Delphi Technologies’ stockholders.