Shares of commercial vehicle technology and services provider Wabco (WBC) - Get Report tumbled in premarket trading Thursday after reaching a deal to be acquired by Germany's ZF Friedrichshafen for $136.50 per share in cash.
Wabco fell 10.4% in premarket trading to $130.84. The stock has run up steeply since rumors of a merger started swirling earlier this year.
The purchase price places an equity value of $7 billion on the company.
"This is the right combination at the right price at the right time for Wabco. We have a history of successful collaboration with ZF, including prototyping industry-first technologies, and the strategic fit between our two companies is compelling. After a thorough review, we are very pleased to announce a definitive agreement that we believe is in the best interest of Wabco shareholders," said Wabco CEO Jacques Esculier.
Despite the good feelings from the merger, Esculier acknowledged that the path forward for the company is rocky as the industry is changing.
"We see great opportunities ahead, but they will be more challenging to realize. It has become increasingly apparent that our industry will face a new level of strategic complexity and will attract new competition, including new entrants from outside the sector, able to bring unprecedented resources to the table," Esculier said. "Considering these factors, we strongly believe this is the appropriate moment to be joining forces with ZF."
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