The post Foxconn’s bid for ZF stake stalls after due diligence reveals debt, valuation gap appeared on BitcoinEthereumNews.com.

Foxconn’s two-year effort to acquire a major stake in a key unit of German auto supplier ZF Group has hit a wall after due diligence conducted by its advisor, JPMorgan, revealed a wide valuation gap and a higher-than-expected debt. Per documents reviewed by Reuters, Foxconn’s due diligence concluded that ZF’s powertrain technology division, known internally as Division E, was worth between $1.74 billion and €2.5 billion, far below the $2.9 billion figure previously discussed.  More strikingly, the unit’s equity value was found to be negative, compared with an earlier estimate of $1.5 billion. A comment in the internal materials reportedly read: “No deal if equity value is negative.” Debt burden and valuation mismatch The due diligence uncovered that Division E’s net debt was almost 90% higher than expected, reaching $4.9 billion, according to the JPMorgan document titled Project Verde – Discussion Materials. A significant portion of that debt, nearly $1.1 billion, reportedly came from previously underestimated pension liabilities.  Foxconn and ZF had been exploring a potential investment under which the Taiwanese company would inject around $1.5 billion to buy a stake in the division if its equity valuation reached $3 billion, a structure outlined in a ZF document dated February 2025. According to the findings, ZF has been struggling under a heavy debt load from past acquisitions.  Foxconn’s EV ambitions tested Foxconn, formally known as Hon Hai Precision Industry, has been trying to replicate its success in electronics manufacturing in the automotive world. The company has identified electric vehicles as a pillar of future growth and wants to capture a sizeable part of the global EV market. Foxconn has launched several ventures to anchor itself in the EV ecosystem, but progress has been uneven. In July, Foxconn sold a former factory in the U.S. that it initially acquired in 2022…

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Filed under: News - @ October 15, 2025 5:25 pm