The race to acquire Sweden-based commercial vehicle braking and suspension systems supplier Haldex intensified last week with Knorr-Bremse throwing its hat in the ring as a potential buyer. The latest bidder offered to pay Haldex SKE110 a share, 10% more than ZF’s SEK100 per share offer. Knorr-Bremse’s offer valued Haldex at SEK4.86 billion (around USD570 million) compared with SEK4.41 billion (USD516 million) in the case of ZF’s offer.
ZF’s SEK100 per share offer was 5.9% more than the SEK94.42 a share offer from SAF Holland. Haldex’s Chairman Göran Carlson took little time to publically express a preference for ZF’s offer and went to the extent of pledging his 5.7% stake in the company to facilitate the acquisition. The company’s board of director asked shareholders to accept ZF’s offer and reject the one by SAF Holland. Haldex’s board even suggested those shareholders who had already accepted SAF Holland’s offer withdraw their acceptance before the deadline of 24 August.
If Haldex’s board continues to favour ZF’s offer, which may prove difficult given the new offer from Knorr-Bremse, shareholders may not follow the board’s suggestion and that could trigger a hostile takeover bid. However, Knorr-Bremse CEO Klaus Deller has said that his company’s offer to Haldex is not a hostile offer. Deller believes Haldex’s acquisition will significantly strengthen its presence in the trailer market.
There are also speculation on whether or not ZF will come out with a higher bid. Following the offer by Knorr-Bremse, the company said it would assess the situation. However, ZF said it continues to believe that its offer of SEK100 per share is fair and adequately reflects the long-term value of a combination of ZF and Haldex.
Knorr-Bremse claims that it has already acquired 8.4% stake in Haldex. ZF claims that it secured the 5.7% of Goran Carlson’s stake in Haldex. However, the takeover, either by Knorr-Bremse or Haldex, will be cleared only after receiving approvals from 90% of Haldex shareholders. Amid this, SAF Holland does not seem to have altogether given up hope of a successful offer either. The company had secured 3.4% of Haldex before it came up with the offer to acquire the company’s outstanding shares. According to SAF’s spokesman, the company is examining how best to make use of its holding in Haldex.
The acquisition by either Knorr Bremse or ZF could trigger an antitrust issue, given both companies have strong presence in commercial vehicle chassis systems and there will be some overlap. Haldex’s board might also look at how the two companies would deal with this issue. Recent takeover bids for similar businesses have come under higher regulatory scrutiny, especially by the European Commission (EC) in Europe. For instance, when Plastic Omnium agreed to acquire automotive exterior business of rival Faurecia earlier this year, the EC gave conditional approval for the takeover. The commission cleared the deal on conditions that Plastic Omnium would divest Faurecia’s bumper business in France, a site in Spain and front-end module business in Germany. The divestment represented almost one-third of the revenue of Faurecia’s automotive exterior business in 2015.
The strong interest for Haldex reflects the continuing priority of the commercial vehicle sector to improve driving safety and driving comfort. It also reflects major suppliers’ focus to grow through consolidation. ZF, which concluded TRW’s acquisition last year, continues to look for options which are of strategic value. The company recently acquired 40% stake in Ibeo Automotive System, which specializes in LiDAR technology. Last week ZF also acquired 40% in software firm dubleSlash to strengthen presence in area of vehicle connectivity. Knorr-Bremse acquired tedrive Steering System in June this year to foray into automotive steering segment, which was completed today (12th September). During the same month, the company acquired commercial vehicle transmission components business of Bosch.
Meanwhile, Haldex appears to be enjoying all the limelight due to the bidding race. The company implemented major strategic changes in the first half of this decade. The most vital development in the company’s recent history was split of its diverse business in 2011. Prior to that year, Haldex was operating four business divisions. The company’s hydraulic business was turned into a new company called Concentric. Haldex sold its traction division along with the all-wheel drive (AWD) for passenger car busines, to BorgWarner, and its spring wire division to Suzuki Metal. The company has spent the past five years improving its efficiency and profitability through restructuring. However, it seems time has come for the company to make another strategic move and become part of a major supplier.
