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November 29, 2005

GERMANY: US electronics company buys European auto supplier

A privately held producer of electronic coils and transformers primarily for the European automotive market has been sold to an American electronics company.

A privately held producer of electronic coils and transformers primarily for the European automotive market has been sold to an American electronics company.

Philadelphia-based buyers Technitrol have agreed to a purchase price of EUR49m (US$57.6m) for Germany’s ERA.

ERA produces automotive coils, antilock brake parts, keyless entry systems, shock absorber sensors and transmission controls.

It will become part of the newly formed automotive products division within the power products group of Technitrol’s Pulse unit.

For the 12 months ending December 31, 2006, ERA’s revenues are expected to be about $90 million and, before synergies that should arise from its integration into Pulse, ERA is expected to contribute between $0.08 and $0.10 per share to Technitrol’s annual earnings.

Pulse expects that the integration of ERA operations will be largely completed by the end of 2007, resulting in annual net savings of over $8 million by 2008.

Technitrol chairman and chief executive officer James Papada said: “ERA is a market leader in automotive coils, transformers and similar components, with very strong relationships with the premier German automakers.

“As vehicles incorporate increasing numbers of electronic features such as keyless entry , intelligent headlights and windscreen wipers, drive-by-wire throttles, steering and stabilisation systems, analysts believe that for the foreseeable future, the automotive component market will grow in excess of 10% per year, much faster than auto production.”

Technitrol is a worldwide producer of electronics and other precision-engineered parts and materials for manufacturers in the data networking, internet access, consumer electronics, telecommunications, military, aerospace, automotive and electrical equipment industries.

It hopes ERA’s extensive sales and engineering presence will give Pulse’s other divisions a strong foothold in Germany, Europe’s largest market, where they currently have only a small presence.

ERA’s principal product line consists of automotive ignition coils and transformers used in automotive, heating/ventilating/air conditioning and appliance products.

It has also succeeded in developing ionisation-sensing ignition coils incorporated with spark plugs, tailoring the duration of the spark in a combustion chamber to specific driving conditions.

Papada added: “We are enthusiastic about the European automotive market, which is known for feature-rich vehicles that require increasing numbers of coils, sensors, immobilisers and power-conversion components supplied by ERA.”

Technitrol will finance the acquisition using bank credit under a multi-currency facility. The deal should close in early 2006.

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