BorgWarner makes EV play with Sevcon deal
DETROIT — BorgWarner Inc. agreed to acquire Sevcon Inc. for an estimated $ 200 million in a deal that adds more electric vehicle technology to the supplier’s vehicle-propulsion engineering and product portfolio.
The purchase gives BorgWarner, a major automotive powertrain supplier, notably transmissions and turbochargers, better access to electric propulsion markets in the U.S. and Europe, the company said Monday.
The deal also accelerates the company’s “existing strategy to supply leading technology for all types of propulsion systems; combustion, hybrid and electric,” BorgWarner CEO James Verrier said in a statement.
Sevcon, a U.K. manufacturer of controls and battery chargers for zero-emission hybrid and electric vehicles, said the purchase price was equal to $ 22 a share, or a 61 percent premium above the closing price of the company’s shares on July 14.
BorgWarner will likely fund the transaction with existing cash.
“The proposed merger with BorgWarner provides substantial value to our stockholders and the chance for Sevcon to maximize previous growth investments and capitalize on greater opportunities as a part of a much larger organization with significant market presence,” Sevcon CEO Matt Boyle said.
Sales at BorgWarner’s engine business rose by 6.9 percent to nearly $ 1.5 billion in the first quarter. The company’s drivetrain business is also growing, with first-quarter sales rising 5.2 percent to nearly $ 925 million.
The deal, pending shareholder and antitrust approval, is expected to close in the fourth quarter of this year.
“BorgWarner should be able to expand Sevcon’s technologies to new applications, geographies and volume programs in the long-term,” Wells Fargo analyst Richard Kwas said in a note to investors, adding that BorgWarner is an existing customer of Sevcon.
The latest deal is expected to help BorgWarner navigate a landscape in which the auto industry is slowly migrating from the combustible engine to other forms of power — notably electric and fuel cells.
In April, BorgWarner invested in Autotech Ventures, a Silicon Valley-based venture capital firm, which monitors and backs new automotive and technology startups. BorgWarner Chief Strategy Officer Brady Ericson said at the time that the $ 10 million investment would help the company adapt to shifts in propulsion technology and personal mobility.
“While trends from electrification and autonomy continue to evolve, BorgWarner’s recent business moves are defining its position in the future automotive landscape,” Ericson said in a statement in April about the Autotech investment.
BorgWarner, of Auburn Hills, Mich., ranks No. 28 on the Automotive News list of the top 100 global suppliers, with worldwide parts sales to automakers of $ 8.02 billion in 2015.
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