April 30, 2020 / 7:51 PM / a month ago

BorgWarner still working to close acquisition of Delphi after breach claim

DETROIT (Reuters) - U.S. auto parts maker BorgWarner Inc (BWA.N) and its acquisition target Delphi Technologies PLC (DLPH.N) said on Thursday they are still working to close their deal, following a breach claim that BorgWarner made against Delphi.

On March 31, BorgWarner threatened to walk away from its deal to buy UK-based Delphi after Delphi drew down on a credit line without BorgWarner’s approval. The January deal valued Delphi at $3.3 billion.

The companies said in separate, but almost matching, statements that they still hope to close the deal in the second half of 2020, but a final deal was not definite.

“We continue to believe in the strategic merits of the transaction and are working with Delphi Technologies towards closing the transaction,” BorgWarner said in its statement.

“There can be no assurance, however, that BorgWarner and Delphi Technologies will reach a mutually acceptable resolution or that the proposed transaction will close,” BorgWarner added. “When we have more to say we will let you know.

Delphi tapped its $500 million revolving credit facility to help it weather the hit from the coronavirus outbreak. BorgWarner said that breached the deal terms and gave Delphi 30 days to address the issue. That period expired Wednesday night.

Delphi disputed its action was a breach of the terms of the deal and said BorgWarner had “unreasonably” withheld its approval. Delphi said it still hoped to negotiate a solution.

The acquisition, BorgWarner’s biggest merger in at least a decade, is meant to add Delphi’s expertise in power electronics and expand BorgWarner’s portfolio as the auto industry makes a wider range of vehicles that focus on clean technology.

Reporting by Ben Klayman; Editing by Chris Reese and Leslie Adler

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