Continental makes biggest acquisition in its history
Auto parts maker Continental has acquired fellow German company VDO Siemens, a supplier of automotive electronics and mechatronics, for €11.4 billion ($15.6 billion), the biggest acquisition in its 136-year history.
The deal creates a €25 billion ($34.2 billion) business, based on 2006 figures, with a workforce of approximately 140,000. The supervisory boards of Siemens and Continental have approved the deal, which elevates Continental into the top five of the global automotive supply industry. The acquisition should satisfy some of Germany’s politicians who were concerned that VDO would be sold to a foreign company.
In Deutsche Welle, Christian Wulff, the conservative premier of Lower Saxony, was reported as giving his public support for Continental’s bid and said: “It would look a lot worse for the employees of the automotive supplier division of Siemens if international financial investors got their hands on technology, jobs and production plants here,” Wulff said. When announcing the transaction, Continental said the purchase price included future tax benefits for Continental worth approximately €1 billion ($1.36 billion) and “which do not result in any loss of revenue for tax authorities.” Commenting on the integration of the two companies, scheduled for completion by the of 2009, Continental’s Executive Board chairman Manfred Wennemer said: “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.”
Continental is hoping to make synergies worth at least €170 million a year from 2010. In other news from the Hanover-based Continental group, the rubber and plastics technology specialist ContiTech has beefed up its position on automotive surfaces materials with the purchase of automotive sheeting producer Alkor, a subsidiary of Renolit. The acquisition was made through ContiTech subsidiary Benecke-Kaliko, based in Hanover. In exchange, Benecke-Kaliko will sell its furniture coverings business to Renolit. (prw.com)
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