FRANKFURT (Reuters) - German auto parts maker ZF Friedrichshafen has agreed to buy U.S. rival Wabco for over $7 billion, an acquisition it has long targeted to bolster its expertise in autonomous-driving technologies.

The all-cash deal, announced by the two companies on Thursday, is for $136.50 per share. That represents a 13 percent premium to Wabco’s closing price on Feb. 26, the day before the American company said it had been approached by ZF.

ZF, which helps carmakers develop gearboxes and hybrid drivetrains, has been on the lookout for a strategic partner as it foresees semi-autonomous driving functions and vehicle connectivity developing into important new business areas.

“The combination of both businesses is expected to further accelerate the development of new technologies to enable autonomous commercial vehicle functions, making ZF less dependent on the economic cycle of the passenger car industry,” ZF said in a statement.

Wabco’s shares fell 10.3 percent to $130.93 on resuming trade after being suspended early on Thursday. However, they had risen by about 21 percent since Wabco confirmed last month that it had been approached by ZF about a potential takeover.

The two companies said on Thursday that the deal, which is expected to close in early 2020, had been unanimously approved by Wabco’s board of directors. The deal is contingent on ZF clinching more than 50 percent of Wabco’s shares.

ZF, which is unlisted, previously attempted to buy Wabco in 2017 but faltered amid opposition from ZF’s controlling shareholder, the Zeppelinstiftung.

At the time, the foundation was concerned about ZF taking on too much debt by attempting to buy Wabco soon after its acquisition of TRW for $13.5 billion in 2015.

ZF said on Thursday it has received firm financing commitments for the acquisition from J.P.Morgan. It intends to partially refinance the facility via debt capital markets.

“The intended strategic acquisition of Wabco comes at a good time for ZF,” ZF’s Chief Financial Officer Konstantin Sauer said in a statement. “Following the successful integration of TRW, ZF has significantly reduced its debt levels.”

Wabco specializes in advanced driver assistance systems for trucks and trailers, key building blocks for developing autonomous driving technologies, a major growth area for ZF.

The acquisition will cut ZF’s dependence on the passenger car market to around 70 percent of its business, from 80 percent currently, Chief Executive Wolf-Henning Scheider said.

The market for advanced driver assistance systems and autonomous vehicles is expected to grow to $96 billion in 2025 and $290 billion in 2035, from about $3 billion in 2015, according to Goldman Sachs.

ZF and Wabco already jointly developed a so-called Evasive Manoeuvre Assist system, which combines Wabco’s braking, stability and vehicle dynamics control systems for trucks with ZF’s active steering technology.

Wabco has its headquarters in Europe but its executive offices are in Auburn Hills, Michigan.

Wabco’s Chief Executive Jacques Esculier said ZF provided the most suitable strategic fit for Wabco’s portfolio of technologies in a sector that is rapidly consolidating.

Goldman Sachs advised Wabco on the deal, he said.

“The competitive environment will become a lot more complicated and busy,” Esculier said, adding that he wanted Wabco to make a move before the good consolidation options ran out.

“You don’t want to be the last person to pick your partner,” Esculier said.