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Investing.com-- Hon Hai Precision Industry (TW:2317), or Foxconn, hit a snag in its two-year pursuit of a stake in a unit of German auto supplier ZF Group, Reuters reported on Wednesday.
Foxconn’s pursuit of the stake stalled due to a substantial mismatch in valuation expectations and a bigger-than-expected debt pile, Reuters reported, citing documents on the matter.
Foxconn’s findings from its due diligence of the unit were circulated days before ZF Group said in October that it would abandon plans to spin off its powertrain technology unit, called Division E, the report said.
Due diligence found that Division E’s estimated value of between 1.5 billion euros and 2.5 billion euros ($1.7-$2.9 bln) was lower than a prior estimate of 3.5 billion euros. The equity value of Division E was also found to be negative, Wednesday’s report said.
The Taiwanese electronics giant– which ranks tech majors Apple Inc (NASDAQ:AAPL) and NVIDIA Corporation (NASDAQ:NVDA) among its customers– had sought the stake as part of its expansion in the electric vehicle business.
ZF is not in talks with Foxconn and other parties about partnerships covering specific products in Division E, Reuters reported.
Foxconn has steadily sought to expand its EV footprint in recent years, having earlier pursued ventures with China’s Geely Automobile (HK:0175) and American automakers, although neither of the two partnerships materialized.
The company is seeking to collaborate with Japanese automakers on EVs, having earlier this year signed an agreement with Mitsubishi Motors Corp. (TYO:7211) to supply an EV model.