BorgWarner Is in Talks to Acquire Delphi
BorgWarner’s biggest deal to date is the $950 million acquisition of Remy International Inc. in 2015.
(Bloomberg) -- BorgWarner Inc. is in advanced discussions to acquire Delphi Technologies Plc in a deal that would unite two auto suppliers positioning for the industry’s shift to hybrid and electric vehicles, according to people familiar with the matter.
An agreement could be announced as soon as this week, said the people, who asked not to be identified because the talks are private. Negotiations could still fall apart, they said.
Delphi Technologies has a market value of about $844 million and around $1.5 billion in long-term debt, according to filings. BorgWarner, based in Auburn Hills, Michigan, is worth about $7.9 billion.
The deal could become BorgWarner’s biggest to date if it surpasses the $950 million acquisition of Remy International Inc. in 2015, according to data compiled by Bloomberg.
Both companies’ engine and transmission businesses are seen by analysts as entering a period of decline as carmakers consolidate and invest in the development of electric cars. They’ve been investing in products automakers will need for hybrid models that use both gasoline engines and battery power, as well as fully electric vehicles.
“This could be the beginning of powertrain consolidation, which is coming out of necessity,” said Chris McNally, an analyst with Evercore ISI. “All the suppliers are dealing with lower global volumes combined with the transition towards electric vehicles, which requires heavy investment.”
Forced by governments around the world to improve fuel efficiency and cut emissions, automakers are turning to smaller, lighter engines and electrifying their lineups. The industry has also been hit by sluggish economic growth and the U.S. trade war with China.
Representatives for Delphi and BorgWarner declined to comment.
Delphi Technologies, based in the U.K., was one of two companies to split from Delphi Automotive in 2017. The other was Aptiv Plc, focused on new technology like advanced safety systems and self-driving car software. The split left the smaller Delphi Technologies to focus on supplying engine and transmission parts.
Delphi was the world’s largest parts maker when General Motors Co. spun off the company in 1998.
--With assistance from Aaron Kirchfeld, Kiel Porter and Siddharth Philip.
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