Core Insights - Foxconn's acquisition plan for ZF Group's powertrain technology division has stalled due to significant valuation discrepancies and unexpected debt burdens [2][3] Acquisition Plan and Valuation Discrepancies - Foxconn aimed to expand its automotive business by acquiring ZF Group's powertrain technology division, which possesses advanced technology and experience in automotive transmission systems [3] - The valuation range determined by Foxconn's due diligence was between €1.5 billion and €2.5 billion, significantly lower than the previous estimate of €3.5 billion [3] - Post-due diligence findings revealed a negative equity value for the division, contrasting sharply with an earlier estimated positive equity value of €1.3 billion [3] Debt Issues Highlighted - The due diligence uncovered a net debt of €4.177 billion for the powertrain division, nearly 90% higher than expected, with €944.7 million attributed to additional pension liabilities [3][4] - This high debt burden exacerbates ZF Group's financial pressure, which has already accumulated substantial debt from previous acquisitions [4] Exploration of New Cooperation Models - Despite the stalled acquisition, both Foxconn and ZF Group are exploring new cooperation models, including technology sharing, joint research and development, and supply chain collaboration [5] Foxconn's Commitment to Automotive Sector - Foxconn has shown a strong desire to enter the automotive market, driven by the vision of its founder, Terry Gou, who likens cars to "iPhones on wheels" [6] - The company's automotive strategy encompasses not only vehicle manufacturing but also critical components like batteries and semiconductors [6] Historical Overview of Foxconn's Automotive Ventures - In 2005, Foxconn acquired a 100% stake in Taiwan's Antai Electric, marking its entry into automotive electronics [7] - Foxconn became a major supplier for Tesla in 2010 and has since partnered with luxury brands like Mercedes and BMW [8] - The company has engaged in various automotive projects, including joint ventures and investments in electric vehicle startups [9][10][11][12][13][14][15][16][17][18]