Continental Acquires Motorola’s Auto Electronics Business

Continental AG and Motorola, Inc. have jointly announced that the
companies have entered into an agreement under which Continental will acquire Motorola’s automotive electronics business for approximately US$ 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 marks another milestone in Continental’s mission to make individual mobility safer. The company says:

• It will significantly increase its product portfolio and R&D capabilities in body and sensor electronics as well as powertrain and chassis controls.
• It will double overall sales of Continental’s Automotive Systems division in North America.
• It will add a completely new and exciting technology to Continental’s product range: telematics.
• Telematics will further enhance Continental’s position as a leader in active and passive vehicle safety. It will allow Continental to intensify and expand the integration of features that help avoid collision with features of post crash safety/emergency assistance of occupants.

“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,” said Continental’s Executive Board chairman Manfred Wennemer.

“Motorola’s automotive electronics business is a perfect fit with our
strategy of providing sophisticated 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 predicted to generate double digit growth in the upcoming years. This is a perfect example of our strategy to improve our sales and operating profits with organic growth as well as sound acquisitions.”

Continental has been constantly expanding its core competencies in vehicle dynamics, reaching 13.8 billion Euros (US$ 17.2 billion) in sales in 2005. The corporation will be integrating Motorola’s automotive electronic business of US$ 1.6 billion in annual sales into 5.2 billion Euros (US$ 6.5 billion) Automotive Systems Division.

“We are pleased to work with Continental to transition our automotive business to an industry leader focused on bringing innovative solutions to automotive customers worldwide. Motorola is proud of the performance and leadership of our automotive electronics employees who will become a valuable addition to Continental,” said Greg Brown, president of Motorola’s Networks & Enterprise business, which oversees the automotive electronics unit.

“This transaction positions Motorola for continued success by further sharpening our strategic focus on communications solutions that advance our vision of Seamless Mobility.”

Since inventing the first commercially successful car radio in 1930,
Motorola has been an industry leader and innovator for electronic
solutions to the global automotive industry. Innovations include the
first all-electronic alternator system (1961); the first computerized
electronic engine control module (1980); and the first Telematics
emergency messaging system (1996).

Motorola’s automotive unit currently is a component of its Networks & Enterprise business. The unit employs nearly 4,500 employees worldwide of which approximately 80 per cent are based in North America. Manufacturing facilities and development engineering centres include locations in North America, Japan, China, Mexico, France, U.K, and Germany.

Major customers include General Motors, Ford, 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)
• 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,” said 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. 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 centres will increase our testing and leading-edge research capabilities and will further expand our engineering resources,” Dr. Neumann added.

“Integrating Motorola’s automotive electronics business also means a further step in the globalization of our product and service offer to
our customers. This addition also enhances the Automotive Systems Division’s position in our intelligent safety systems, hybrid electronics, powertrain and chassis controls, and body electronics categories.”