BorgWarner Investors’ Inquiry on Delphi Acquisition Deal and Tornado Damage of a Plant

Investors of BorgWarner Inc. or BorgWarner, American automotive components and parts supplier, are looking for information regarding the present status of the acquisition deal of Delphi Technologies Plc or Delphi as well as damages of the supplier’s South Carolina plant caused by a tornado. Existing investors of the component supplier have made an inquiry on these two issues when the company reported the result of its performance in the first quarter (Q1) on Wednesday, May 6, 2020.

Questioning Acquisition Deal Status

BorgWarner has entered an acquisition deal with a UK-based Delphi under an agreement of a transaction valued at $3.3 billion in January. However, the deal turned out to be embroiled in a dispute on March 31 when BorgWarner threatened to walk away from the agreement after Delphi drew down on a credit line without the approval of the former company. The American company alleged that Delphi breached the deal terms when the latter company tapped its $500 million revolving credit facility to protect it from the coronavirus impact.

However, Delphi denied the allegation and claimed that BorgWarner had “unreasonably” withheld its approval. While a 30-day period to address the issue expired last week, sources reported that the companies hoped to come into a negotiation with keeping the target to close the deal in the second half of 2020.

The Delphi acquisition deal was the BorgWarner’s biggest in at least a decade since the American car component supplier aimed to add Delphi’s expertise in power electronics and expand its portfolio as the auto industry focusing to produce vehicles based on clean technology.

Inquiry on Damages of a Plant by Tornado

BorgWarner investors also made an inquiry about the magnitude of damage caused by a tornado on April 13 at BorgWarner’s Seneca, South Carolina, plant. The plant was a key producing unit, which makes transfer cases and all-wheel-drive components, for the company and supplied its products to other automobile companies.

In early March, BorgWarner had closed its manufacturing operations at certain plants including the plant at South Carolina in response to the shutdown of auto production in Europe and North America due to the COVID-19 outbreak.

The US automotive supplier said that it was assessing the damage, but local media have shown pictures of the plant, which displayed the beams of the building exposed after the roof was peeled off, missing walls, piles of twisted metal, and destroyed trailers that had been loaded with parts. BorgWarner has said insurance would cover repair or replacement of the plant, as well as lost profits.

Ford Motor Co. had previously warned that the production of high-priced versions of its pickups and SUVs could be hurt due to the tornado incident at the BorgWarner plant. Sources reported, “The plant makes transfer cases for some of Ford’s most profitable vehicles, such as four-wheel-drive large F-series pickups and large SUVs.”

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