FRANKFURT (Bloomberg) -- German supplier ZF Friedrichshafen's supervisory board has backed negotiations to buy TRW Automotive Holdings Corp. after two days of meetings with management, said two people familiar with the matter.
ZF CEO Stefan Sommer and his board were given the green light to continue talks with TRW as they aim to reach a deal over the next few weeks, said the people, who asked not to be identified as the discussions are private. No final decision has been made and the talks could still fall apart, one of the people said.
ZF spokesman Martin Demel declined to comment.
ZF confirmed earlier this month that it's in talks with TRW about an acquisition, which would create the world's second-largest auto-parts supplier by sales -- combining a maker of steering systems and transmissions with a leading producer of car-safety technology. TRW has a market value of $11.3 billion.
ZF is looking to add TRW technology -- from air bags to collision sensors -- that keeps drivers secure and helps them avoid crashes, to its existing suite of mechanical parts, as consumer demand and government regulation are spreading the adoption of features to prevent accidents and protect passengers and pedestrians.
U.S.-based TRW, which derived most of its sales last year from safety-related products, said in April it projects the market for driver-assistance technology will grow more than five-fold through 2020. A combination would create a company with almost $40 billion in annual sales, vaulting ZF to the No 2. spot among world's largest auto-parts suppliers, rankings compiled by Automotive News Europe show. Robert Bosch is currently the largest supplier with global sales of $40.1 billion in 2013.
Based in Friedrichshafen, Germany, ZF makes steering systems, clutches and axles, and transmissions, including the fuel-efficient, nine-speed unit Fiat Chrysler Automobiles uses in its Jeep Cherokee SUVs and Chrysler 200 sedans.