High debt, low valuation, union boycott Foxconn's acquisition of ZF encounters obstacles

After two years of promotion, Foxconn's equity acquisition plan for Division E, a subsidiary of ZF Group, a leading global automotive supplier, is about to go bankrupt. On the one hand, the valuation of the department is much lower than Foxconn's expectations, while the debt burden is higher than expected; On the other hand, ZF itself has announced that it will restructure the department through its own efforts and abandon the plan to split it. This means that this acquisition has no possibility of advancement objectively or subjectively. The Electric Drive Transmission Technology Division is a business unit of ZF Group that focuses on electric, hybrid, and traditional power systems. It is a key part of Foxconn's acquisition of ZF project. In July 2023, ZF and Foxconn signed a joint venture agreement. On April 30, 2024, Foxconn completed the acquisition of 50% of the shares of ZF Chassis Module Co., Ltd., and the new joint venture company was named ZF Foxconn Chassis Module Co., Ltd. But the restructuring of ZF is accompanied by ongoing employee negotiations. According to the original plan, the transmission system business, which is the core business of ZF, will be spun off and discussed for joint venture or merger with Foxconn. However, employees strongly oppose it due to the potential risk of resource transfer. ZF ultimately chose to reach an agreement with the union. On October 1st, with the resignation of CEO Holger Klein, ZF announced an internal restructuring plan that included retaining the electric drive transmission technology division, laying off 7600 employees, and reducing labor costs by 500 million euros.