TRW Automotive receives takeover offer from unidentified buyer

US-based TRW Automotive Holdings, biggest maker of auto safety components yesterday confirmed that a company had offered to acqure it.

TRW said in a statement that it had received, ''a preliminary, non-binding proposal to acquire the company. The company is evaluating the proposal as well as other strategic alternatives which may enhance stockholder value'' and has hired Goldman, Sachs & Co as its financial adviser.

Though the company did not reveal who had made the approach, the prospective acquirer was identified by Bloomberg as privately-held German auto supplier ZF Friedrerichshafen AG, best known for its widely used ZF transmissions.

The of Michigan-based company's stock price, already up on rumours of an $11-billion acquisition proposal, continued to remain high in the day and closed yesterday at $98.91, up $7.51 or 8.2 per cent on a day when major stock indexes were off roughly 0.4 per cent to 0.5 per cent.

In the event of deal a deal being confirmed, the purchase price would exceed TRW's market capitalisation of $10 billion and  would be "the largest auto-parts takeover since Conti acquired Siemens' VDO Automotive unit for €11.4bn in 2007," says industry analyst Brian Johnson at Barclay's.

Johnson added in a note to clients, "We would not have seen ZF as a logical buyer – but ZF may value TRW's electric steering and active safety business:...While TRW's business generates a steady stream of cash, margin and growth upside is limited, and it is not clear to us why ZF, which generates nearly 60% of its revenue from Europe, would want to further increase its European exposure."

Barclays Capital said in a research note that ''we believe that the news might spur merger consideration in the broader sector.'' According to a number of analysts, TRW could draw competing offers from other big auto suppliers like Magna International.

TRW Automotive with operations across 24 countries, including 12 in the US reported 2013 sales of $17.4 billion. The company boasts a workforce of 67,000 people worldwide - along with about 11,000 contract workers.