Continental AG shells out $1 billion for various Motorola businesses

April 4, 2006

Continental AG and Motorola Inc. have entered into an agreement under which Continental will acquire Motorola's automotive electronics business for approximately $1 billion in cash.

The transaction includes Motorola's controls, sensor, interior electronics and telematics businesses. The acquired business will be integrated into Continental's Automotive Systems Division.

The transaction is expected to be completed in the first half of 2006, and is subject to customary closing and regulatory conditions.

The acquisition adds telematics to Continental's product portfolio. It also will double overall sales of Continental's Automotive Systems division in North America.

"This strategic move will further strengthen our position as a safety and systems supplier to the automotive industry and will give us a real push forward in automotive electronics," says Continental Executive Board Chairman Manfred Wennemer.

"Motorola's automotive electronics business is a perfect fit with our strategy of providing so¬phisticated safety systems to our customers. They are a premier telematics supplier and possess profound experience in this field. We are thus adding a successful enterprise with well-educated, highly motivated and innovative employees in a field of our business pre¬dicted to generate double digit growth in the upcoming years."

"This transaction positions Motorola for continued success by further sharpening our strategic focus on communications solutions that advance our vision of Seamless Mobility," says Greg Brown, president of Motorola's Networks & Enterprise business, which oversees the automotive electronics unit.

The unit employs nearly 4,500 employees worldwide; approximately 80% are based in North America. Motorola's manufacturing facilities and development engineering centers include locations in North America, Japan, China, Mexico, France, the United Kingdom and Germany. Major customers include General Motors Corp., Ford Motor Co., Daimler Chrysler, BMW and Cummins.

The business has three major product lines focusing on electronics parts and supplies:

* telematics (embedded wireless vehicle communications),

* powertrain and chassis control (steering, suspension, occupant detection electronics and stability control), and

* body electronics (heating ventilation, air conditioning and electronics for power doors, power seats, window lift and electric mirrors).

"The integration of Motorola’s automotive unit will enhance Continental's ability to offer our customers long-term technology solutions in the areas of telematics, safety electronics, powertrain as well as interior and sensor technologies," says Dr. Karl-Thomas Neumann, president of Continental's Automotive Systems Division.

"The addition of telematics allows Continental Automotive Systems to take active/passive safety to the next level of functionality and performance. It will be integrated as a new business unit into the Division Automotive Systems.

"Continental Automotive Systems has made excellent progress over the past few years in integrating active and passive safety technologies, e.g. by linking safety systems such as Electronic Stability Control (ESC) with occupant safety elements like airbags," says Neumann. "Our new telematics capabilities not only increase the functionality of active safety performance by helping to avoid collision, they also enhance the post crash safety and emergency assistance of occupants.

"The integration of telematics opens the door to embedded car-to-car digital communication and vehicle-to-infrastructure communication, taking intelligent vehicle safety to the next level. We see great potential for this new, expanded capability as the automotive industry shifts focus towards more active safety.

"Finally, the acquisition of laboratories and R&D centers will increase our testing and leading-edge research capabilities and will further expand our engineering resources," he adds.

Continental recorded sales of 13.8 billion euros ($17.2 billion) in 2005. The corporation will be integrating Motorola's automotive electronic business of $1.6 billion in annual sales into its $6.5 billion Automo¬tive Systems Division.