BorgWarner has agreed to buy Delphi Technologies in a $3.3 billion deal in an effort to expand in a growing market for hybrid and electric vehicles.
Delphi shareholders will receive 0.4534 shares of BorgWarner for each share held, Borgwarer said in a news release on Tuesday, That translates to $17.39 per share, a premium of about 77 percent to Delphi's closing price on Monday.
The equity value of the deal is about $1.5 billion. Delphi had long-term debt $1.47 billion as of Sept. 30.
BorgWarner makes automotive parts including automatic transmissions, turbochargers, emissions systems and thermostats.
Delphi manufactures electronic control modules that manage various powertrain components and other auto parts.
BorgWarner will own about 84 percent of the combined company after the expected closing of the deal in the second half of 2020, the companies said.
BorgWarner also announced a three-year share repurchase program of up to $1 billion.
The deal will unite two suppliers positioning for the industry's shift to hybrid and electric vehicles.
BorgWarner's biggest deal to date is the $950 million acquisition of Remy International in 2015, according to data compiled by Bloomberg.
Both companies' engine and transmission businesses are seen by analysts as entering a period of decline as automakers consolidate and invest in the development of electric cars. They have been investing in products automakers will need for hybrid models that run using both gasoline engines and battery power, as well as full-electric vehicles.
Forced by governments around the world to improve fuel efficiency and cut emissions, automakers are turning to smaller, lighter engines and electrifying their lineups. The industry has also been hit by sluggish economic growth and the U.S. trade war with China.
Delphi Technologies, based in the UK, was one of two companies to split from Delphi Automotive in 2017. The other was Aptiv, focused on new technology like advanced safety systems and self-driving car software. The split left the smaller Delphi Technologies to focus on supplying engine and transmission parts.
Delphi was the world's largest parts maker when General Motors spun off the company in 1998.
BorgWarner ranks No. 22 on the Automotive News Europe list of the top 100 global suppliers with worldwide original-equipment automotive parts sales of $10.53 billion in 2018, while Delphi ranks No. 62 with automotive parts sales of $3.86 billion in the same period.
Bloomberg contributed to this report
