Delphi used $500 million in credit, and Berger Warner threatened to give up the acquisition
Berger Warner, a U.S. auto parts supplier, threatened on Tuesday that it would abandon a $951 million acquisition of Delphi technology.
US auto parts supplier Berger Warner on Tuesday threatened to give up a $951 million deal to buy Delphi technology, Reuters reported. Earlier, the auto equipment supplier used a line of credit without bog Warner’s approval.
Delphi said novel coronavirus was used to help combat the impact of the new coronavirus outbreak, Delphi said in a statement.
Bergwarner said the move violated the terms of the agreement and asked Delphi to “resolve” the issue within 30 days.
Delphi responded that bergwarner “unreasonably refused to agree,” but added that it intended to find a solution through negotiations.
In January, Berger Warner announced the acquisition of Delphi technology. According to the agreement, the transaction is expected to be completed in the second half of 2020.
Delphi shares closed at $8.05 in New York, down 22% on Tuesday, well below Berger Warner’s $11.04 per share, reflecting investors’ concerns that the deal could not be completed.
The novel coronavirus Berg warner has also been a big threat in the industry business, because some people believe that other companies will abandon their contracts that they had completed with contractual obligations on the ground of the credit line of the new coronavirus pandemic. However, M & A agreements usually only allow the buyer to abandon the transaction if he can prove that the disaster impact of the acquisition target from the signing to the completion of the transaction is more serious than that of other companies.
However, the Delphi case shows that in times of crisis, reluctant buyers can take advantage of the credit lines of the target. A novel coronavirus epidemic caused by the market turmoil has increased concerns about the potential liquidity crisis, and many companies are currently scaling down or expanding their loan arrangements.
Both Berger Warner and Delphi specialize in automatic transmissions. Berger Warner, the larger of the two companies with annual revenue of more than $10 billion, has been expanding its electric products.
For Berger Warner, the acquisition of Delphi technology is also a good deal. In terms of finance, in 2019, the revenue of bog Warner and Delphi technologies is US $10.17 billion and US $4.36 billion respectively, totaling US $14.5 billion. After the merger, the new group’s global business will be more balanced, with 39% in Europe, 32% in North America and 27% in Asia Pacific.
In addition, business integration can bring synergy and reduce costs. Bergwarner predicts that by 2023, the combined company will achieve a synergy of about $125 million in sales, management and administration costs and procurement costs.
2020-12-13