Valeo and Zexel Corporation signed on June 25, 2000 the agreement confirming their Memorandum of Understanding announced at the end of 1999.

This agreement sets up a global alliance in the field of climate control systems, compressors and engine cooling. Closing is scheduled for July 31, 2000, subject to clearance from competition authorities.

This transaction is structured as follows:

Valeo is acquiring the European and North American climate control activities of Zexel. The latter currently operates three facilities in the USA as well as marketing and sales activities in Europe, employing 500 people. 1999 sales of this activity totaled Euro 160 million, bringing Valeo Climate Control sales in Europe and North and South America to over Euro 1.4 billion.

A joint venture is being set up between Valeo and Zexel covering air conditioning systems in Japan and other Asian markets (ASEAN and Korea) as well as Zexel’s worldwide compressors business. Total sales amount to Euro 1.1 billion. The joint venture will operate fourteen plants located in Japan, the USA, Thailand, South Korea and China and employ 4,200 people.
Valeo will initially own, from July 31, 2000, a 40% shareholding in this new joint venture to be named Zexel Valeo Climate Control Corporation. The Group has an option to raise its stake to 50% after a period of three years.

A second joint venture is being created between Valeo and Zexel Valeo Climate Control Corporation for engine cooling systems in Asia. This joint venture is 60% owned by Valeo and 40% by Zexel Valeo Climate Control Corporation.
Through the comprehensive integration of engine cooling and climate control thermal systems, the strategic alliance between Valeo and Zexel will enhance the new partners’ ability to meet the expectations of their customers on a global scale and, as a result, to grow profitably.

According to the agreement, Zexel is acquiring a 7% stake in Valeo’s Climate Control Branch. Zexel has an option to increase its stake to 10% from the third year after the closing date.

Andre Navarri, Valeo Chairman and Chief Executive Officer, commented on this transaction: “We have created a truly global player. The combined business stands as one of the world leaders in climate control systems and compressors with strong growth potential. The opportunity to develop in Asia in engine cooling with Zexel also looks very promising.”

Valeo is an independent industrial Group fully focused on the design, manufacture and sale of components systems and modules for cars and trucks. Present in the original equipment and aftermarket segments, Valeo is among the world’s top automotive suppliers with 1999 sales of Euro 7.7 billion. The Group employs 51,700 people worldwide and has 118 production facilities, 39 Research and Development centers and 10 distribution centers in 20 countries.

Zexel, with sales of Yen 230 billion and approximately 10,000 employees, is a major Japanese automotive supplier specializing in fuel injection and air-conditioning systems. Zexel (which will be renamed “Bosch Automotive Systems” effective from July 1, 2000) is majority owned by Robert Bosch GmbH, Stuttgart, which is one of the world’s largest automotive suppliers, with sales of DM 55 billion and approximately 195,000 employees. For more information on the Group and its businesses, please consult our Web site: