AUBURN HILLS, Mich.
and LONDON, Jan. 28, 2020
/PRNewswire/ -- BorgWarner Inc. (NYSE: BWA) and Delphi
Technologies PLC (NYSE: DLPH) today announced that they have
entered into a definitive transaction agreement under which
BorgWarner will acquire Delphi Technologies in an all-stock
transaction that values Delphi Technologies' enterprise value at
approximately $3.3 billion.
The acquisition would strengthen BorgWarner's power electronics
products, capabilities and scale. Combining with Delphi
Technologies is consistent with BorgWarner's evolution towards the
propulsion market of the future and would enable BorgWarner to
maintain flexibility across combustion, hybrid, and electric
propulsion (C-H-E).
Under the terms of the agreement, which has been approved by the
boards of directors of both companies, Delphi Technologies
stockholders would receive a fixed exchange ratio of 0.4534 shares
of BorgWarner common stock per Delphi Technologies share. Upon
closing of the transaction, current BorgWarner stockholders are
expected to own approximately 84% of the combined company, while
current Delphi Technologies stockholders are expected to own
approximately 16%.
In fiscal year 2019, BorgWarner and Delphi Technologies estimate
that they generated $10.17 billion
and $4.36 billion of net sales,
respectively. Following the close of the transaction, the
combined company is expected to be one of the leading pure-play
propulsion companies globally, serving light and commercial vehicle
manufacturers and the aftermarket. The combined company would offer
a unique, more comprehensive portfolio of industry-leading
propulsion products and systems across combustion, hybrid and
electric, resulting in greater content per vehicle relative to
BorgWarner today.
"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," said 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 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."
Compelling Strategic and Financial Benefits:
Bringing BorgWarner and Delphi Technologies together is expected
to:
- Strengthen BorgWarner's power electronics products,
capabilities and scale, creating a leader in electrified propulsion
systems that is well-positioned to take advantage of future
propulsion migration. Delphi Technologies brings industry
leading power electronics technology and talent, with an
established production, supply and customer base. The combined
company would offer customers a suite of integrated and standalone
offerings of power electronics products (including high voltage
inverters, converters, on-board chargers and battery management
systems) and capabilities (including software, systems integration
and thermal management).
- Enhance BorgWarner's combustion, commercial vehicle and
aftermarket businesses. Delphi Technologies' breadth of
combustion propulsion products complements BorgWarner's innovative
portfolio, which is focused on clean technologies to increase
efficiency and performance of modern combustion vehicles. Adding
Delphi Technologies' commercial vehicle and aftermarket business
results in more balance across light vehicles, commercial vehicles
and the aftermarket.
- Drive meaningful synergies. BorgWarner expects the
combined company to realize run-rate cost synergies of
approximately $125 million by 2023
driven primarily by SG&A and procurement savings. These savings
are incremental to Delphi Technologies' and BorgWarner's existing
cost reduction plans. In addition, BorgWarner expects significant
long-term revenue synergies primarily from the opportunity to offer
more integrated electrified products, creating further value for
the combined company's stockholders.
- Deliver earnings accretion and preserve BorgWarner's strong
balance sheet. The transaction is expected to be meaningfully
accretive to adjusted GAAP earnings per share in the second full
year after closing. BorgWarner 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.
BorgWarner Authorizes Share Repurchase Program
BorgWarner today also announced that its Board of Directors has
authorized a share repurchase program of up to $1 billion to be executed over the next three
years. This is consistent with the company's historic approach to
capital allocation and demonstrates confidence in its plan to
deliver strong free cash flow generation over the long term. The
timing and amount of any share repurchases will be based on market
conditions, share price and other factors. Repurchases may be made
in the open market or in privately negotiated transactions and may
be made under Rule 10b5-1 plans.
Timing and Approvals
The BorgWarner/Delphi Technologies transaction is expected to
close in the second half of 2020, subject to approval by Delphi
Technologies' stockholders, the satisfaction of customary closing
conditions and receipt of regulatory approvals.
Management and Headquarters
Following the closing of the transaction, the combined company
will be led by Frédéric Lissalde, BorgWarner's President and CEO,
and Kevin Nowlan, BorgWarner's CFO,
and will operate as BorgWarner. The combined company will be
headquartered in Auburn Hills,
Michigan.
Preliminary Full Year 2019 Financial Results
In a separate press release issued today, BorgWarner announced
preliminary full year 2019 financial results, which is available on
the "Investor Relations" section of the BorgWarner website at
http://www.borgwarner.com/investors. BorgWarner will issue a press
release and hold a conference call to discuss its fourth quarter
and full year 2019 financial results on February 13, 2020.
In a separate press release also issued today, Delphi
Technologies announced preliminary full year 2019 financial
results, which is available on the "Investor Relations" section of
the Delphi Technologies website at http://ir.delphi.com. Delphi
Technologies file its Form 10-K on February
13, 2020, and in light of today's transaction will not be
holding its previously scheduled earnings call.
Advisors
BofA Securities, Inc. and Rockefeller Financial LLC acted as
financial advisors to BorgWarner and Simpson Thacher & Bartlett
LLP acted as its legal advisor. Goldman Sachs International acted
as financial advisor to Delphi Technologies and Kirkland &
Ellis LLP acted as its legal advisor.
Transaction Conference Call
BorgWarner and Delphi
Technologies will host a conference call today, at 8:00 a.m. ET to discuss the transaction. The
conference call can be accessed by dialing (877) 658-9096 (U.S. /
Canada) or (602) 563- 8733
(International) and giving the passcode 8997486. A replay of the
call will be available from January 28,
2020 until February 4, 2020 by
dialing (855) 859-2056 (U.S. / Canada) or (404) 537-3406 (International) and
giving the passcode 8997486.
A live webcast of the conference call will be available on the
investor relations sections of BorgWarner's and Delphi
Technologies' websites at http://www.borgwarner.com and
http://ir.delphi.com/investors.
Presentation Materials
Associated presentation materials and an infographic regarding
the transaction are available on the investor relations section of
each company's website at http://www.borgwarner.com/investors and
http://ir.delphi.com as well as a joint transaction website at
http://www.LeadingPropulsion.com.
About BorgWarner
BorgWarner Inc. (NYSE: BWA) is a
global product leader in clean and efficient technology solutions
for combustion, hybrid and electric vehicles. With manufacturing
and technical facilities in 67 locations in 19 countries, the
company employs approximately 30,000 worldwide. For more
information, please visit borgwarner.com.
About Delphi Technologies
Delphi Technologies is a
global provider of propulsion technologies that make vehicles drive
cleaner, better and further. It offers pioneering solutions for
internal combustion engine, hybrid and electric passenger cars and
commercial vehicles. Delphi Technologies builds on its Original
Equipment expertise to provide leading service solutions for the
aftermarket. Headquartered in London (UK), the company operates technical
centers, manufacturing sites, customer support service centers in
24 countries and employs more than 21,000 people around the world.
Visit www.delphi.com to learn more.
No Offer or Solicitation
This communication is being made in respect of the proposed
acquisition (the "proposed
transaction") of Delphi Technologies by BorgWarner.
This communication is not intended to and does not constitute an
offer to sell or the solicitation of an offer to subscribe for or
buy or an invitation to purchase or subscribe for any securities or
the solicitation of any vote or approval in any jurisdiction
pursuant to the proposed transaction or otherwise, nor shall there
be any sale, issuance or transfer of securities in any jurisdiction
in contravention of applicable law. In particular, this
communication is not an offer of securities for sale into
the United States. No offer of
securities shall be made in the United
States absent registration under the U.S. Securities Act of
1933, as amended (the "Securities Act"), or pursuant to an
exemption from, or in a proposed transaction not subject to, such
registration requirements. Any securities issued in the proposed
transaction are anticipated to be issued in reliance upon available
exemptions from such registration requirements pursuant to Section
3(a)(10) of the Securities Act. In connection with the proposed
transaction, Delphi Technologies will file certain proxy materials,
which shall constitute the scheme document and the proxy statement
relating to the proposed transaction (the "proxy statement"). The
proxy statement will contain the full terms and conditions of the
proposed transaction, including details with respect to the Delphi
Technologies shareholder vote in respect of the proposed
transaction. Any decision in respect of, or other response to, the
proposed transaction should be made only on the basis of the
information contained in the proxy statement.
Participants in the Solicitation
Delphi Technologies, BorgWarner and certain of their respective
directors, executive officers and employees may be deemed
"participants" in the solicitation of proxies from Delphi
Technologies shareholders in respect of the proposed transaction.
Information regarding the foregoing persons, including a
description of their direct or indirect interests, by security
holdings or otherwise, will be set forth in the proxy statement and
any other relevant documents to be filed with the Securities and
Exchange Commission (the "SEC"). You can find information about
Delphi Technologies' directors and executive officers in its Annual
Report on Form 10-K for the fiscal year ended December 31, 2018, its definitive proxy statement
filed with the SEC on Schedule 14A on March
15, 2019, and certain of Delphi Technologies' Current
Reports on Form 8-K filed with the SEC on January 7, 2019 and July
30, 2019. You can find information about BorgWarner's
directors and executive officers in its Annual Report on Form 10-K
for the fiscal year ended December 31,
2018 and its definitive proxy statement filed with the SEC
on Schedule 14A on March 15,
2019.
Additional Information and Where to Find It
This communication may be deemed solicitation material in
respect of the proposed transaction. In connection with the
proposed transaction, Delphi Technologies will file with the SEC
and furnish to Delphi Technologies' shareholders a proxy statement
and other relevant documents. This communication does not
constitute a solicitation of any vote or approval. Before making
any voting decision, Delphi Technologies' shareholders are urged to
read the proxy statement and any other relevant documents filed or
to be filed with the SEC in connection with the proposed
transaction or incorporated by reference in the proxy statement (if
any) carefully and in their entirety when they become available
because they will contain important information about the proposed
transaction and the parties to the proposed transaction.
Investors will be able to obtain free of charge the proxy
statement and other documents filed with the SEC at the SEC's
website at http://www.sec.gov. In addition, the proxy statement and
Delphi Technologies' and BorgWarner's respective annual reports on
Form 10-K, quarterly reports on Form 10-Q, current reports on Form
8-K and amendments to those reports filed or furnished pursuant to
section 13(a) or 15(d) of the U.S. Securities Exchange Act of 1934,
as amended, are available free of charge through Delphi
Technologies' and BorgWarner's websites at www.delphi.com and
www.borgwarner.com, respectively, as soon as reasonably practicable
after they are electronically filed with, or furnished to, the
SEC.
Forward-Looking Statements
This communication may contain forward-looking statements as
contemplated by the 1995 Private Securities Litigation Reform Act
that reflect, when made, Delphi Technologies' or BorgWarner's
respective current views with respect to future events, including
the proposed transaction, and financial performance or that are
based on their respective management's current outlook,
expectations, estimates and projections, including with respect to
the combined group following the proposed transaction, if
completed. Such forward-looking statements are subject to many
risks, uncertainties and factors relating to Delphi Technologies'
or BorgWarner's respective operations and business environment,
which may cause the actual results of Delphi Technologies or
BorgWarner to be materially different from those indicated
in any future results. All
statements that address future operating, financial or business
performance or Delphi Technologies' or BorgWarner's respective
strategies or expectations are forward-looking statements. In some
cases, you can identify these statements by forward-looking words
such as "may," "might," "will," "should," "could," "designed,"
"effect," "evaluates," "forecasts," "goal," "guidance,"
"initiative," "intends," "pursue," "seek," "target," "when,"
"will," "expects," "plans," "intends," "anticipates," "believes,"
"estimates," "predicts," "projects," "potential," "outlook" or
"continue," the negatives thereof and other comparable terminology.
Factors that could cause actual results to differ materially from
these forward-looking statements include, but are not limited to,
the possibility that the proposed transaction will not be pursued;
failure to obtain necessary regulatory approvals or required
financing or to satisfy any of the other conditions to the proposed
transaction; adverse effects on the market price of Delphi
Technologies' ordinary shares or BorgWarner's shares of common
stock and on Delphi Technologies' or BorgWarner's operating
results because of a failure to complete the proposed transaction;
failure to realize the expected benefits of the proposed
transaction; failure to promptly and effectively integrate Delphi
Technologies' businesses; negative effects relating to the
announcement of the proposed transaction or any further
announcements relating to the proposed transaction or the
consummation of the proposed transaction on the market price of
Delphi Technologies' ordinary shares or BorgWarner's shares of
common stock; significant transaction costs and/or unknown or
inestimable liabilities; potential litigation associated with the
proposed transaction; general economic and business conditions that
affect the combined group following the consummation of the
proposed transaction; changes in global, political, economic,
business, competitive, market and regulatory forces; changes in tax
laws, regulations, rates and policies; future business acquisitions
or disposals; competitive developments; and the timing and
occurrence (or non-occurrence) of other events or circumstances
that may be beyond Delphi Technologies' or BorgWarner's
control.
For additional information about these and other factors, see
the information under the caption "Risk Factors" in Delphi
Technologies' most recent Annual Report on Form 10-K filed with the
SEC and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" filed on February 21, 2019, and the information under the
caption "Risk Factors" in BorgWarner's most recent Annual Report on
Form 10-K filed with the SEC and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" on
February 19, 2019.
Delphi Technologies' and BorgWarner's forward-looking statements
speak only as of the date of this communication or as of the date
they are made. Delphi Technologies and BorgWarner each disclaim any
intent or obligation to update or revise any "forward looking
statement" made in this communication to reflect changed
assumptions, the occurrence of unanticipated events or changes to
future operating results over time, except as may be required by
law. All subsequent written and oral forward-looking statements
attributable to Delphi Technologies, BorgWarner or their respective
directors, executive officers or any person acting on behalf of any
of them are expressly qualified in their entirety by this
paragraph.
General
The release, publication or distribution of this communication
in or into certain jurisdictions may be restricted by the laws of
those jurisdictions. Accordingly, copies of this communication and
all other documents relating to the proposed transaction are not
being, and must not be, released, published, mailed or otherwise
forwarded, distributed or sent in, into or from any such
jurisdictions. Persons receiving such documents (including, without
limitation, nominees, trustees and custodians) should observe these
restrictions. Failure to do so may constitute a violation of the
securities laws of any such jurisdiction. To the fullest extent
permitted by applicable law, the companies involved in the proposed
transaction disclaim any responsibility or liability for the
violations of any such restrictions by any person.
Any response in relation to the proposed transaction should be
made only on the basis of the information contained in the proxy
statement and other relevant documents. Delphi Technologies
shareholders are advised to read carefully the formal documentation
in relation to the proposed transaction once the proxy statement
and other relevant documents have been dispatched.
CONTACTS
BorgWarner
IR contact:
Patrick
Nolan
Phone: +1 248-754-0884
Email: ir@borgwarner.com
PR contact:
Michelle
Collins
Phone: +1 248-754-0449
Email: mediacontact@borgwarner.com
Delphi Technologies
IR contact:
Sherief
Bakr
Phone: +44 7557 895 781
Email: sherief.bakr@delphi.com
PR contact:
Kristen
Kinley (Global/ Americas)
Phone: +1 248 535-3930
Email: kristen.kinley@delphi.com
View original content to download
multimedia:http://www.prnewswire.com/news-releases/borgwarner-to-acquire-delphi-technologies-in-all-stock-transaction-to-strengthen-propulsion-systems-leadership-300994333.html
SOURCE BorgWarner Inc.