BorgWarner to buy Delphi Technologies in $3.3bn deal

Both companies supply auto parts and BorgWarner said the acquisition would strengthen its power electronics products, capabilities and scale.

Under the terms of the agreement, which has been approved by the boards of directors of both companies, Delphi shareholders would receive a fixed exchange ratio of 0.4534 shares of BorgWarner common stock for each of their shares. Current BorgWarner shareholders would own approximately 84% of the combined entity, while Delphi Technologies holders would own the rest.

The deal is expected to be meaningfully accretive to adjusted GAAP earnings per share in the second full year after closing. BorgWarner said it expects the combined company to maintain a strong balance sheet, with a 2019 pro forma gross debt to adjusted EBITDA ratio of approximately 1.6x at closing.

Frédéric Lissalde, president and chief executive officer of BorgWarner, said: "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.

"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."

At 1300 GMT, Delphi shares were up 61% in pre-market trade to $15.74 while BorgWarner shares were down 4.2% at $36.75.