Foxconn’s talks with ZF Group stall over valuation and debt
Foxconn’s plans to acquire a stake in ZF Group’s powertrain division have come to a halt after the Taiwanese company’s due diligence revealed a gap in valuation expectations and higher-than-anticipated debt levels, Reuters reports.
The Taiwanese electronics manufacturer had been in talks for nearly two years to buy into ZF’s powertrain technology division, known as Division E, which produces electric, hybrid, and conventional systems for the automotive sector.
According to documents reviewed by Reuters, Foxconn valued ZF’s Division E between EUR 1.5 and 2.5 billion, significantly below an earlier estimate of EUR 3.5 billion. The findings also showed that the unit’s equity value turned negative after due diligence, compared to an earlier projection of EUR 1.3 billion.
The new assessment was circulated shortly before ZF Group announced in October that it would no longer pursue a planned spin-off of Division E. Instead, ZF is now in discussions with Foxconn and other potential partners regarding product-specific collaborations within the division, a source at ZF told Reuters.
Documents cited by Reuters indicate that Foxconn’s due diligence also uncovered a debt level 90% higher than expected, at EUR 4.18 billion.
ZF Group, which has been carrying significant debt from previous acquisitions, recently announced a restructuring plan that will reduce Division E’s workforce by about a quarter by 2030.
Both companies declined to comment when contacted by Reuters.
The stalled investment is seen as a setback for Foxconn’s ambitions in the electric vehicle market, which the company has identified as a key area for future growth.
