ZF's safety division generated 3.8 billion euros in revenue in 2021 and had a market share of around 25 percent of global sales of passive safety equipment.

Bloomberg

ZF Friedrichshafen has hired Citigroup to advise on the possible sale of its passive safety systems division, people familiar with the matter said.

The privately held engineering group, which supplies automakers including BMW, selected the U.S. bank to explore strategic options including a full or partial sale, as well as a listing in 2024, according to the people.

The business may be worth more than 3 billion euros ($3.2 billion), they said, asking not to be identified discussing confidential information.

ZF last year announced plans to carve out the passive safety unit by the end of 2023 to open up new strategic options, as part of a review of its portfolio.

A separation would create “the best conditions to generate stronger growth and a sustainable expansion of the market position of the world’s number two in the passive safety technology business by involving external investors,” the supplier said.

No final decision on outcome, timing or valuation has been made, the people said. A representative for ZF declined to comment on the mandate, referring to the company’s previous statements on a carve-out.

A spokesperson for Citigroup did not immediately provide comment.

The division generated 3.8 billion euros in revenue in 2021 and had a market share of around 25 percent of global sales of passive safety equipment, ZF said in October.

Its products are used in everything from small to large luxury vehicles.

ZF takes its name from its headquarters in Friedrichshafen, the southern German town on Lake Constance, and can trace its roots back to airship pioneer Ferdinand von Zeppelin.

The company is under pressure to adapt its business for the age of electric and self-driving cars, which may eventually render traditional combustion engine vehicles and their suppliers obsolete.

No stranger to dealmaking, ZF became one of the world’s largest suppliers after agreeing to buy TRW Automotive for $12.9 billion in 2015.

Five years later, it completed its $7 billion acquisition of Wabco Holdings to add commercial-vehicle technology.

ZF ranks third on the Automotive News Europe list of top 100 global suppliers, with sales to automakers of $39.3 billion in 2021.