Swedish brake systems group Haldex said on Thursday its board of directors has recommended shareholders approve a 4.4 billion crown ($515 million) cash offer by Germany’s ZF and reject a separate takeover bid by SAF-Holland.
Haldex said in July it had been approached by two suitors, including commercial vehicle components maker SAF-Holland. It did not name ZF at the time.
Haldex, giving the rationale for recommending the offer, said it had considered risks associated with operating in a highly competitive automotive market with tight margins.
“Haldex has significantly lower sales than the two largest players in the market,” it said in a statement.
“Because of its relatively small size, Haldex is more exposed to these risks than other larger players in the market.”
ZF, which supplies technological solutions to the automotive sector and which acquired TRW Automotive last year, has a global workforce of around 138,300 in some 40 countries and reported sales of 29.2 billion euros in 2015.
“It is ZF’s intention to … develop and expand Haldex technologically and regionally as part of the worldwide activities of ZF Group, especially in its commercial vehicles business,” ZF said.
ZF said it planned to invest in Haldex, not cut costs.
No decisions have been made on the integration of Haldex within ZF Group, including as regards changes to employees or management.
Haldex, a leading supplier of brake adjusters, has 2,200 employees in 18 countries.
It said ZF’s cash offer represented a premium of approximately 34.4 percent per share compared to Haldex’s volume-weighted average price during the three months prior to the announcement of SAF-Holland’s bid on July 14.
The premium was largely in line with recent takeover offers for listed Swedish manufacturing companies.
Finland’s Scanfil, for example, paid a 27 percent premium for Sweden’s Partnertech last year. Premiums in initial offers for metal-powder maker Hoganas and humidity control firm Munters were 17 percent and 30 percent respectively. Both ended up being bought out at a higher price.
Haldex said ZF’s offer was “clearly superior” to a 4.2 billion crown bid by SAF-Holland.
The acceptance period will start on August 22 and expire on or around September 30. (Reporting by Mia Shanley; Additional reporting by Alexander Huebner in Frankfurt; Editing by Adrian Croft).
