Haldex Rejects Higher Knorr-Bremse Offer on Regulatory Concerns

  • Swedish brakemaker recommends ZF’s lower $620 million bid
  • Haldex shares little changed above both suitors’ offers

Haldex AB, the Swedish brakemaker that’s the target of a takeover contest by German rivals, said its shareholders should accept the lower bid submitted by suitor ZF Friedrichshafen AG that values the deal at about 5.3 billion kronor ($620 million).

The 120-krona per-share cash offer by the Friedrichshafen-based company is superior because it’s more likely to be completed, Haldex said Monday in a statement. In contrast, an offer of 125 kronor per share from Munich-based Knorr-Bremse AG may stumble over antitrust hurdles. Haldex shares were little changed at 127.3 kronor at 11:38 a.m. in Stockholm trading, indicating that shareholders expect the bidding war to continue.

“ZF has announced that it has received all necessary regulatory approvals and clearances,” Stockholm-based Haldex said in the statement. “There is a very real and material risk that Knorr-Bremse’s offer would fail to complete, after a lengthy and disruptive review process, taking into account, amongst other things, that Haldex conducts significant business in both the truck and trailer segments.”

Partsmakers are positioning themselves to compete as a shift toward self-driving and electric-vehicle technologies boosts development spending and highlights the need for savings. Companies such as ZF Friedrichshafen, a closely-held maker of transmissions and other components, and Knorr-Bremse, which makes brakes systems for trains and cars, are also under pressure to expand internationally as automakers increasingly seek suppliers with global reach.

The tussle over Haldex, which began in July with a 94.42 krona-per-share bid from SAF-Holland SA, has pushed Haldex shares up almost 50 percent. Knorr-Bremse’s bid is the highest so far and 32 percent more than SAF-Holland’s initial proposal. SAF-Holland has withdrawn.

ZF Friedrichshafen already owns more than 21 percent of Haldex, while Knorr-Bremse holds more than 11 percent, according to statements on Friday.

The purchase of Haldex would raise ZF’s annual revenue from truck components to about 4 billion euros from 3.5 billion euros, accounting for 15 percent to 20 percent of group sales, ZF Chief Executive Officer Stefan Sommer told journalists on a conference call in August.

ZF needs Haldex’s brakes expertise to fill in a product gap for trucks, he said. The two manufacturers’ line-ups are “complementary,” and the German company’s focus is on adding components rather than cutting costs.

Knorr-Bremse, which on Friday reiterated its commitment to the deal, said by e-mail on Monday it would examine the details of Haldex’s recommendation of the ZF offer before responding.

“We are convinced that we can provide more value and stronger prospects for Haldex, its employees and customers,” Knorr-Bremse said on Friday.