BorgWarner and Delphi Technologies have jointly announced that the companies have entered into a definitive agreement under which BorgWarner will be acquiring Delphi Technologies.

An all-stock transaction will take place, with Delphi Technologies valued at an estimated $3.3 billion.

With this acquisition, BorgWarner intends to strengthen its portfolio, capabilities and scale of power electronics products. The move is also aligned with the company’s expansion into the propulsion market while allowing it to remain flexible across combustion, hybrid, and electric propulsion (C-H-E).

Current BorgWarner stockholders are expected to own around 84% of the combined company and current Delphi Technologies stockholders are expected to own approximately 16% after the acquisition is completed.

Following standard approvals from Delphi Technologies, the transaction is expected to be completed by the second half of 2020. After the acquisition, the company will operate as BorgWarner. It will be headed by Frédéric Lissalde, BorgWarner’s President and CEO, and Kevin Nowlan, BorgWarner’s CFO. The headquarters will be located in Auburn Hills, Michigan.

With the combined product portfolio and expertise, BorgWarner aims at emerging a leader in propulsion products and systems across combustion, hybrid and electric, delivering better content per vehicle than what BorgWarner currently offers. The company wishes to be a leader amongst pure-play propulsion companies worldwide, catering to the light and commercial vehicle manufacturers and the aftermarket.

Both CEOs welcome the merger

“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,” explained Frédéric 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.”

Mr. Lissalde further added, “We have a great deal of respect for Delphi Technologies’ team around the world and look forward to welcoming them to BorgWarner. We are confident that together we will be able to move faster to address market trends toward electrification.”

“This is a compelling transaction that we are confident delivers clear benefits to our stakeholders,” said Richard F. 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.”

The acquisition is expected to bring in the following benefits:

• Strengthen BorgWarner’s power electronics products, capabilities and scale allowing the company to emerge as a leader in electrified propulsion systems that is capable of taking advantage of future propulsion migration.
• Improve BorgWarner’s combustion, commercial vehicle and aftermarket businesses with the product portfolio and expertise of Delphi Technologies.
• Drive meaningful synergies financially for both companies.
• Deliver earnings accretion and preserve BorgWarner’s strong balance sheet.