The supplier wants to part with its business with occupant protection systems.
(Photo: ZF)
Frankfurt, Stuttgart Auto parts maker ZF has begun preparations to sell its airbag and seat belt business. The investment bank Citigroup has now been commissioned to organize a sales process, said a ZF spokesman on Tuesday, confirming information from financial circles in the Handelsblatt. However, the sales process should start in autumn at the earliest, possibly not until the beginning of 2024.
“We have entered the next phase in which we enlisted professional advice from Citi to explore possible strategic options for the business,” said the ZF spokesman. The spin-off process into an independent entity is progressing according to plan.
According to financial circles, a deal could be valued at two to three billion euros.
A private equity company is considered to be the most likely buyer for the ZF business with the so-called occupant protection system. However, given the current situation on the financing markets, it is difficult for investors to raise the debt capital required for a deal.
Therefore, ZF will probably wait until the markets have calmed down before starting the auction, according to several people familiar with the matter.
When it comes to airbags, ZF is the global number two
After reviewing its portfolio, the company announced in October that it would spin off the airbag business and thus open up “new strategic options for action”. This includes bringing in external investors.
The foundation-owned company is number two in the world for airbags, with a market share of around 25 percent. The market leader is the Swedish company Autoliv with almost 50 percent. The third largest manufacturer is Joyson Safety Systems from China with around 20 percent. Joyson took over the Japanese company Takata in 2018, which had gotten into trouble due to an expensive recall.
The ZF division “Passive Safety Systems” has annual sales of 3.8 billion euros and thus accounts for around ten percent of the group’s sales. She came to the foundation group in 2015 with the purchase of the US auto supplier TRW.
Last year, the division grew by nine percent despite interrupted supply chains. ZF hopes to capitalize on trends toward autonomous driving and greater vehicle safety. The business unit has an annual operating profit of 400 to 450 million euros.
The foundation group is refocusing
At ZF, the approach of permanently combing through the portfolio has not changed, even under Holger Klein, CEO of the Group who has been in office since the beginning of the year. The second largest German automotive supplier has also been looking for an investor for the axle systems business for a long time. So far without success – a sales process organized by Deutsche Bank has come to a standstill due to the difficult financing markets.
The company has to focus and prefers to invest in software and driver assistance systems as well as in semiconductor capacities. Just last week, ZF announced that it would build the world’s largest factory for silicon carbide in Saarland as a junior partner of Wolfspeed. The power-saving chips for power electronics are considered a key technology for electric cars.
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