Market Overview

BorgWarner To Buy Delphi For $3.3B

BorgWarner To Buy Delphi For $3.3B

BorgWarner Inc. (NYSE: BWA) announced Tuesday it will acquire Delphi Technologies PLC (NYSE: DLPH) for about $3.3 billion in an all-stock transaction.

“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," Frédéric Lissalde, President and CEO of BorgWarner, said in a press release. "Delphi Technologies will bring proven leading power electronics technologies, talent and scale that will complement our hybrid and electric vehicle propulsion offerings.”

Delphi stockholders will receive 0.4534 shares of BorgWarner per Delphi share. The transaction will result in Delphi shareholders owning about 16% of the merged company and BorgWarner investors controlling 84%.

Why It’s Important

The deal comes not a moment too soon for Delphi, which analysts projected to have one of the largest five-year bottom-line declines of the entire stock market. BorgWarner expects run-rate cost synergies of about $125 million by 2023, as well as a bolstering of its power electronics segment.

"This is a compelling transaction that we are confident delivers clear benefits to our stakeholders," Delphi CEO Richard F. Dauch said in the release. "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."

The deal is also expected to introduce flexibility across combustion, hybrid and electric propulsion lines. Such flexibility is critical in an era of experimentation and transition toward electric vehicles.

“We are confident that together we will be able to move faster to address market trends toward electrification,” Lissalde said.

The deal is slated to close in the second half of 2020.

Delphi's stock traded higher by 62% to $15.90 per share at time of publication.

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