Juggernaut Rising: Continental Acquires Siemens VDO Automotive

INDUSTRY NEWS
Juggernaut Rising: Continental Acquires Siemens VDO AutomotiveHANOVER, GERMANY - Continental AG is buying Siemens VDO Automotive AG from parent Siemens AG, for approximately $15.7 billion. In addition, the firm says that the acquisition - the largest in its 136-year history - provides excellent prospects and competence for the future in a global market that, while demanding, is equally rich in opportunities. Top 5 muscle

In 2006, Continental and Siemens VDO Automotive AG combined realized aggregate annual sales of more than $34 billion while employing a worldwide work force of close to 140,000. By 2010, Continental expects the anticipated net synergy of the deal will save $235 million annually. Both supervisory boards of Siemens AG and of Continental AG have approved the transaction, which still requires the approval of the appropriate antitrust authorities. The company expects to have the purchase fully approved by the end of 2007, with full integration concluded by the end of 2009. It would vault Continental into the Top 5 worldwide suppliers in the automotive industry. Already a leading automotive supplier of brake systems, chassis components, vehicle electronics, tires and technical elastomers, the acquisition provides the fuel for Continental AG to continue rigorously pursuing its growth strategy.

After the acquisition is complete, Continental will rank fifth among Tier 1 suppliers. (Photo: Continental AG) "In buying Siemens VDO Automotive AG, Continental is taking the logical next step in its evolution to full-range, integrated systems supplier," says Dr. Karl-Thomas Neumann, an Executive Board member responsible for the Automotive Systems division. He notes that the purchase is the latest in a string that began with the purchase of Teves in 1998, and more recently, the acquisition of Temic, Phoenix AG and the automotive electronics business of Motorola Inc. Optimally balanced product portfolio "By joining forces, pooling our innovative prowess and allying our leading positions worldwide in key market segments like safety, chassis, powertrain systems and telematics/infotainment, we are extremely well placed to take on the global competition and to profit from all mega-trends in our branch of industry," notes Manfred Wennemer, chairman of Continental's Executive Board. "We are well aware of the magnitude of the task."

Continental will now be able to provide an optimized portfolio of powertrain and brake products. (Photo: Continental AG) The company believes that pooled know-how in systems technologies like driver-assistance, environment sensors, telematics and electronic brakes will crucially advance the integration of passive and active vehicular safety and, with the innovative systems it generates, also set new standards in the areas of traffic management and accident prevention. Close cooperation with customers in the automotive industry will enable the company to exploit its position as an innovator in the area of powertrain systems - for electric motors and hybrid technology, as well as for engine and transmission management systems - to achieve crucial headway in meeting the worldwide goal of a reduction in carbon dioxide (CO2) emissions.Traction in emerging global trends
Increasingly comprehensive statutory regulations and the demands of motorists worldwide will trigger a much greater market for active and passive vehicle safety components and systems. As a result of increasingly stringent consumption and emissions stipulations all around the globe and consumer-driven demand, Wennemer points to the dynamically growing need for environmentally compatible, climatically neutral powertrain systems - for conventional engines as well as for hybrid technology or ultra-energy-efficient battery systems.

The merger will bring leading expertise in telematics and infotainment under one roof. (Photo: Continental AG)

The continued steep rise in the volume of data and information exchanged among the vehicle, the driver and the infrastructure will create new and rapidly developing markets involving all aspects of networked systems and products in the areas of infotainment and telematics. "The demand for affordable cars will experience double-digit growth worldwide in the next few years," adds Wennemer.

As to Continental's future organizational structure, Wennemer says that, as in the past, operations will be geared toward optimally shaping a corporation that is customer and market driven, efficiency-oriented and effective. "Nothing is going to change as far as the business units' and divisions' entrepreneurial orientation - in the truest sense of the word - is concerned," he adds. "This will very possibly become even more pronounced."

(Source: Continental AG)