BorgWarner Inc. (NYSE: BWA) has completed its takeover of Delphi Technologies, the last vestige of the once-vast General Motors Co. (NYSE: GM) Worldwide Components Group.
The $3.3 billion stock deal positions BorgWarner to grow as a leader in electrified propulsion systems for cars and heavy-duty trucks. The merger was announced in January. BorgWarner and Delphi Technologies estimate they generated $10.17 billion and $4.36 billion in net sales respectively in the 2019 fiscal year.
It is the second-largest merger of major suppliers this year. German supplier ZF Friedrichshafen closed a $7 billion combination with Wabco Holdings Inc in May.
“Through this combination, BorgWarner is even better positioned with a more comprehensive portfolio of industry-leading propulsion products and systems across combustion, hybrid and electric vehicles,” Frédéric Lissalde, BorgWarner president and CEO said in a press release Friday.
The migration from gasoline and diesel-powered vehicles to zero-emissions electric cars and trucks is advancing under pressure from California. Gov. Gavin Newsom proposes banning cars powered by fossil fuels starting in 2035. The Advanced Clean Truck rule passed in June sets sales requirements for 9% zero-emission heavy-duty trucks beginning in 2024.
The Delphi benefits
Delphi Technologies brings industry-leading power electronics technology with an established production, supply and customer base. The combined company offers integrated and standalone power electronics products. Those include high-voltage inverters, converters, on-board chargers and battery management systems.
BorgWarner’s combustion, commercial vehicle and aftermarket businesses benefit from Delphi Technologies’ range of internal combustion propulsion products focused on clean technologies to improve efficiency and performance of modern internal combustion engines.
“We expect that the combination will also strengthen our commercial vehicle and aftermarket businesses,” Lissaldes said.
End of an era
Delphi, a GM spinoff in the 1990s, once was the world’s largest auto supplier. It made most of the components for the former No. 1 automaker. Delphi later expanded into other businesses. A financial scandal in the mid-2000s led to earnings restatements and a five-year bankruptcy reorganization.
Following its emergence from bankruptcy, Delphi shed several non-growing business units. One of those became Chinese-owned Nexteer Automotive, formerly known as Saginaw Steering Gear when it was part of GM’s WCG, the name before Delphi.
“This is the last vestige of that name,” Sam Abuelsamid, principal analyst at Guidehouse Insights, told FreightWaves when the merger was announced.
Two years ago, Dephi split itself into two companies. Aptiv Plc (NYSE: APTV) focuses on autonomous and connected vehicles. Delphi Technologies retained components for internal combustion engines and some electrification applications.
“They knew that the powertrain side of the business was never going to be a growth business,” Abuelsamid said. “It was still a profitable business that was going to be around for a while.”
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BorgWarner acquires Delphi Technologies in $3.3 billion stock deal