In what Continental said was its biggest purchase ever, the supplier has bought Siemens VDO Automotive for EUR11.4bn.
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The company claimed the merged operations – now amongst the top five suppliers in its specialist sectors – would have “unsurpassed competence in chassis, safety, powertrain systems and infotainment.”
Continental and Siemens VDO Automotive last year had combined annual sales of around EUR25bn with a global workforce of about 140,000.
“By joining forces, pooling our innovative prowess and allying our leading positions worldwide in key market segments…, 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.”
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By GlobalData“In buying Siemens VDO Automotive AG, Continental is taking the logical next step in its evolution to full-range, integrated systems supplier,” said Karl-Thomas Neumann, executive board member responsible for the automotive systems division.
“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 Motorola.”
He said the merged Continental/Siemens VDO operations would pool know-how in systems technologies like driver-assistance, environment sensors, telematics and electronic brakes and advance the integration of passive and active vehicular safety and also set new standards in the areas of traffic management and accident prevention.
The two operations would also merge expertise in motors and hybrid technology and engine and transmission management systems to meetCO2 emission reduction goals.
Continental said it thought it paid a fair price for Siemens VDO considering “anticipated net synergy potential in the order of minimum EUR170m a year as of 2010, and the tax advantages… that we realise in connection with the transaction – and which do not work out to any loss of revenue for the state.”
The purchase should close by the end of Q4 2007 and Continental expects full integration of the two businesses by the end of 2009, with most to be completed next year.
“We shall first see to it that the plans worked out by Siemens VDO Automotive under Siemens management are quickly implemented,” said Wennemer.
