-- Biggest purchase in Continental's history clears way to excellent future
prospects
-- Unsurpassed competence in chassis, safety, powertrain systems and
infotainment
-- Consolidated innovative prowess and broad product portfolio with top
technologies
-- Creative power of employees indispensable in carrying through
integration
-- Wennemer: "Fair price paid" -- attractive financing conditions
HANOVER, Germany, July 25 /PRNewswire/ -- With the biggest acquisition
in its 136-year history, Continental AG, Hanover, is investing itself with
excellent prospects for the future in a global market that, while
demanding, is equally rich in opportunities. Continental is buying the
Siemens VDO Automotive AG from Siemens AG, Berlin/Munich, for 11.4 billion
euros. In so doing, it is advancing to a position among the top five
worldwide in this industry. On Wednesday the supervisory boards of Siemens
AG and of Continental AG, in Munich and Hanover respectively, gave their
consent for the transaction. Execution of the acquisition is contingent on
the approval of the appropriate antitrust authorities. As per 2006,
Continental and Siemens VDO Automotive AG realize aggregate annual sales of
around 25 billion euros with a worldwide workforce of close to 140,000.
"Together Continental and Siemens VDO Automotive AG, two companies rich
in tradition and endowed with an enormous performance capability, have the
once- in-a-lifetime opportunity to forge a global frontrunner in the
automotive supplier sector. 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," said Continental Executive
Board chairman Manfred Wennemer. "We are well aware of the magnitude of the
task. A high measure of flexibility, creativity and willingness to
institute change is a sine qua non all around in the demanding process of
integrating the two companies in a spirit of genuine partnership. We are
convinced that the creativeness of both companies' committed employees will
allow our joint project to be crowned with success!"
With the acquisition, Continental AG continues to rigorously pursue a
strategy of value-generating growth in synch with the claim of rendering
individual mobility safer, more comfortable and more environmentally
compatible. "In buying Siemens VDO Automotive AG, Continental is taking the
logical next step in its evolution to full-range, integrated systems
supplier.
We initiated this process with the purchase of Teves in 1998. It
progressed further with the take-over of Temic and the automotive
electronics business of automotive electronics business of Motorola, Inc.
and is now culminating, for the present, with the Siemens VDO Auto motive
AG acquisition. The new Continental thus stands for a future mobility that
is intelligent and highly innovative, making it an even more potent partner
to the automotive industry," said Dr. Karl-Thomas Neumann, Executive Board
member responsible for the Automotive Systems division. He underscored the
advantages of the new Continental:
-- 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.
-- In close cooperation with customers in the automotive industry, the
company will be able to exploit its position as leading 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 CO2 emissions.
-- The intelligent nexus of its top standing worldwide in the telematics
domain and its competence in infotainment systems as well as instrument
panel controls will enable the company to create a broader scope of
utility value for OE customers and end users.
"At the same time we are significantly expanding our market position in
Europe, North America and Asia. We are also welding a happy bond of bundled
innovation synergies and top quality, further enhanced efficiency and an
optimally balanced product portfolio. In the future this will surely enable
us to profit from the major trends in key market segments, with the best
interest of our customers, shareholders and employees uppermost in our
minds," emphasized Continental Executive Board chairman Wennemer. He cited
a few examples:
-- 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 the wishes and demands of end
consumers, there is a 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 continued steep rise in the volume of data and information
exchanged between the vehicle, the driver and the infrastructure will
give birth to 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 two-digit growth
worldwide in the next few years. All-in systems suppliers of even
simple solutions stand to benefit.
"The price agreed upon is commensurate and fair when one takes into
consideration these far-reaching operational and strategic advantages, the
anticipated net synergy potential in the order of minimum 170 million euros
a year as of 2010, and the tax advantages of around a million euros that we
realize in connection with the transaction -- and which do not work out to
any loss of revenue for the state," stressed Wennemer. "We want to boost
this potential as quickly as possible, in equally rigorous and efficient
fashion." The integration is to be effected briskly. Here Continental can
draw, in particular, on experience gathered in the successful integration
processes of the past ten years, as shown not only in the case of Teves,
Temic and Motorola but also by the example of Phoenix.
Contingent on the approval of the respective antitrust authorities, we
expect closing of the transaction prior to the end in the fourth quarter
2007. The integration will have been concluded by the end of 2009, with the
lion's share to be completed already next year. "Obviously restructuring
processes will be necessary in the course of enforcing the overall project.
Here we shall first see to it that the plans worked out by Siemens VDO
Automotive AG under Siemens management are quickly implemented," stressed
Wennemer.
At the same time the Continental Executive Board chairman expressly
called upon employees at both companies, as well as employee
representatives, to play a proactive and constructive role in shaping the
upcoming integration and restructuring processes within the scope of
codetermination.
"We want to jointly arrive at fair solutions. We shall respond to
suggestions, questions and, of course, any reservations as may be voiced
and do everything in our power to ensure that sight is not lost of the
individual employee. Proceeding in dialog, we intend to implement the
integration as smoothly as possible and shape the impact of restructuring
in a socially acceptable manner."
Continental's Executive Board member for finance, Dr. Alan Hippe,
emphasized that the financing of the purchase price does not present an
issue. "The Siemens VDO Automotive AG acquisition will have the effect of
shaping a more efficient capital structure at Continental. We have already
been able to negotiate attractive terms with the banks. As announced, we
have sewn up a financing package that allows us to meet our target of a
consistently solid credit rating of BBB or Baa2. Currently rated BBB+ and
Baa1, Continental remains in close touch with the rating agencies in this
regard. The package will be comprised largely of borrowings on equity,
backed up by measures aimed at bolstering our equity capital," Hippe
explained.
At the same time, the Continental Executive Board chairman stressed:
"Neither the sale of ContiTech nor of the tire divisions is planned." As to
the future organizational structure, Wennemer announced that, as in the
past, operations will be geared towards 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. This will very possibly become even more pronounced," said
Wennemer.
The Continental Corporation is a leading automotive supplier of brake
systems, chassis components, vehicle electronics, tires and technical
elastomers. In 2006 the corporation realized sales of EUR 14.9 billion. At
present, it has a worldwide workforce of around 87,000.
Corporate Image and Video Library: http://www.conti-online.com
-- This press release has been prepared by Continental Aktiengesellschaft
solely for the "Agreement to acquire Siemens VDO" on July 25, 2007.
-- It has not been independently verified. It does not constitute an
offer, invitation or recommendation to purchase or subscribe for any
shares or other securities issued by Continental AG and neither shall
any part of it form the basis of, or be relied upon in connection with,
any contract or commitment whatsoever.
-- Thus, neither Continental Aktiengesellschaft nor any of their
affiliates, advisors or representatives shall have any liability
whatsoever (in negligence or otherwise) for any loss that may arise
from any use of this document or its contents or otherwise arising in
connection with this document.
-- This presentation includes assumptions, estimates, forecasts and other
forward-looking statements, including statements about our belief and
expectations regarding future developments as well as their effect on
the results of Continental. These statements are based on plans,
estimates and projections as they are currently available to the
management of Continental. Therefore, these statements speak only as of
the date they are made, and we undertake no obligation to update
publicly any of them in light of new information or future events.
Furthermore, although the management is of the opinion that these
statements, and their underlying beliefs and expectations, are
realistic, no guarantee can be given that the expected developments and
effects will actually occur. Many factors may cause the actual
development to be materially different from the expectations expressed
here. Such factors include, for example and without limitation, changes
in general economic and business conditions, fluctuations in currency
exchange rates or interest rates, the introduction of competing
products, the lack of acceptance for new products or services and
changes in business strategy.
SOURCE Continental AG
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Related links:
http://www.conti-online.com
http://www.contitevesna.com/
http://www.prnewswire.com/comp/437525.html /
CONTACT:
Dr. Heimo Prokop, Director Corporate
Communications, +49 511 938-1485, prkonzern@conti.de, or Hannes
Boekhoff, Head of Press, +49 511 938-1278, prkonzern@conti.de,
both of Continental AG
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