Foxconn’s bid for Germany’s ZF unit stalls, documents show

Foxconn’s plan to acquire a stake in ZF Group’s Division E stalled last month after due diligence revealed lower-than-expected valuations and higher debt, according to documents.

Division E, which makes electric, conventional, and hybrid systems, was valued at €1.5 billion (US$1.61 billion) to €2.5 billion (US$2.68 billion) by Foxconn’s advisers, down from an earlier €3.5 billion (US$3.75 billion) estimate.

Documents also showed Division E’s equity value turned negative, compared to a previous estimate of €1.3 billion (US$1.39 billion).

Foxconn’s review found the unit’s net debt was nearly 90% higher than expected at €4.2 billion (US$4.5 billion), driven in part by additional pension liabilities.

After the stalled deal, ZF Group is now in talks with Foxconn and others for product partnerships within Division E, according to a person with direct knowledge of the matter.

🔗 Source: Reuters

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Due diligence found negative equity at ZF Division E, driven by pension liabilities

Foxconn’s due diligence on ZF’s powertrain technology unit Division E estimated net debt at €4.177 billion, nearly 90% higher than expected, including €944.7 million in pension liabilities. The unit’s equity turned negative compared with an €1.3 billion estimate.
In 2023, ZF posted a 5.1% adjusted EBIT (earnings before interest and taxes) margin, €2.4 billion in adjusted EBIT, and cut net debt by €400 million 1.
After the deal stalled, ZF said in October it would drop plans to spin off Division E. The company is discussing product-specific partnerships within Division E with Foxconn and others, according to a person with direct knowledge.

ZF electric drivetrains and collaborations

ZF produces AxTrax 2 integrated electric axle for light-, medium- and 6×4 heavy-duty trucks 2. It also offers the eBeam Axle for pickups and vans 3.
The company showed an 800V e-drive concept with silicon carbide (SiC) power electronics and a coaxial transmission that delivers 275 kW peak power at 70 Nm/kg torque density using braided stator windings 4.
Work with Infineon in the EEmotion project put AI-enhanced control software on Infineon’s Aurix TC4x microcontroller, an automotive-grade processor used in vehicle controllers 5.
Programs that extend the life of parts include the ZF REMAN label for remanufactured components and reflashable circuit boards in products like the third-generation iABS trailer anti-lock braking system (ABS) 5. It also rolled out the CorExpedia core-return platform, a digital system for returning used parts for remanufacturing 5.