Delphi Technologies (DLPH) - Get Report jumped more than 60% premarket after the company agreed to be acquired by BorgWarner (BWA) - Get Report, a $3.3 billion deal that combines two major producers of auto parts.
Under the terms, Delphi holders would get 0.4534 BorgWarner share for each of their shares. The deal would give BorgWarner holders 84% of the new company and Delphi holders 16%.
At last check, Delphi shares were up 62% at $15.91. BorgWarner shares were trading off 6.7% at $35.78.
Delphi, London, makes power-train fuel-injection systems for legacy combustion automobiles as well as hybrid and electric vehicles.
The deal creates an international pure-play propulsion company, serving light- and commercial-vehicle producers and the aftermarket, the companies said.
The deal “[strengthens] our position in electrified propulsion as well as our combustion, commercial vehicle and aftermarket businesses," BorgWarner CEO Frédéric Lissalde said in a statement.
"We are confident that together we will be able to move faster to address market trends toward electrification."
For fiscal 2019, BorgWarner generated $10.17 billion in net sales while Delphi reported $4.36 billion.
The two sides expect the deal to add substantially to adjusted earnings per share in the second full year after the deal closes. They expect to close the deal in the second half, subject to conditions including regulatory clearances.
Separately, BorgWarner, Auburn Hills, Mich., said the board approved a $1 billion share buyback to be executed over three years.
Delphi shares had fallen nearly 50% in six months and Tuesday’s deal put the stock back where it was before the drop.