Engineering giant BorgWarner is to acquire components manufacturer Delphi Technologies in a takeover deal worth $3.3 billion (£2.52 billion).
The move had a profound impact on both companies’ share prices immediately following the announcement earlier this month; shares in Delphi soared 61.95 percent to $15.86 on the NYSE immediately following the announcement, but BorgWarner shares slumped 7.76% to $35.38, as investors seemed nervous about the company investing in a company best known for diesel technology.
Speaking to investment journal Barrons, Research Analyst David Leiker commented: “For BorgWarner shareholders, we understand a view that this doesn’t reduce exposure to internal combustion engines.” Delphi Technologies’ stock tends to trade at a lower price to its rivals, given the company’s exposure to now-unfashionable fuel system parts.
Delphi Technologies was formed in 2017 when the original company split into two parts. Aptiv PLC has the automotive electronics and software side of the business, while Delphi Technologies has powertrain and aftermarket components.
Frederic Warner, CEO of BorgWarner, explained what drew the company to Delphi: “We were impressed by the electronics know-how overall and the scale…and the talent, the capabilities of the electronics. Delphi Technologies is really ahead of the curve. I think they’re a year more advanced than others.”
In 2019, Delphi Technologies generated $4.36 billion of net sales, while BorgWarner $10.17 billion.