Continental AG Announces Agreement to Acquire the Automotive Electronics Business of Motorola, Inc.

- Strategic move of a leading automotive supplier strengthens global

presence and increases service and product offering for customers


- Integration into Continental increases growth potential and expands

resources for the development of intelligent vehicle systems for safety

electronics, body electronics, powertrain and telematics

Apr 03, 2006, 01:00 ET from Continental Teves

 -- Continental AG and Motorola, Inc. (NYSE:   MOT) today jointly announced that
 the companies have entered into an agreement under which Continental, a
 leading automotive supplier, 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.
     Another milestone and perfect fit
     The acquisition marks another milestone in Continental's mission to make
 individual mobility safer.
     -- It will significantly increase its product portfolio and R&D
 capabilities in body and sensor electronics as well as powertrain and chassis
     -- 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 on Monday in Frankfurt.
     "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 is one of the leading automotive suppliers worldwide and has
 been constantly expanding its core competencies in vehicle dynamics, reaching
 EUR 13.8 billion (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 its EUR 5.2 billion (US$ 6.5 billion) Automotive Systems
     "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 Net works &
 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).
     Communications, controls, body electronics
     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% are based in North America. Manufacturing facilities
 and development engineering centers 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)
     Telematics adds new set of technologies
     "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."
     Car-to-car digital communication
     "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," 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."
     The Continental Corporation is a leading supplier of brake systems,
 chassis components, vehicle electronics, tires and technical elastomers. In
 2005 the corporation realized sales of EUR13.8 billion. At present it has a
 worldwide workforce of approximately 80,000.
     As a worldwide leading technology partner to the automotive industry, the
 Automotive Systems Division of Continental AG integrates extensive know-how
 and uncompromising quality in the fields of driving safety, powertrain and
 comfort. In 2005 the Division achieved sales of approx. EUR 5.2 billion with a
 workforce of more than 24,000. Continental Automotive Systems is specialized
 on integrating active and passive driving safety, developing innovative
 electric drives and making available intelligent body electronics.
     Motorola is known around the world for innovation and leadership in
 wireless and broadband communications.  Inspired by our vision of Seamless
 Mobility, the people of Motorola are committed to helping you get and stay
 connected simply and seamlessly to the people, information, and entertainment
 that you want and need.  We do this by designing and delivering "must have"
 products, "must do" experiences and powerful networks - along with a full
 complement of support services.  A Fortune 100 company with global presence
 and impact, Motorola had sales of US $36.8 billion in 2005.  For more
 information about our company, our people and our innovations, please visit
     "MOTOROLA and the Stylized M Logo are registered in the US Patent &
 Trademark Office. All other product or service names are the property of their
 respective owners. (C) Motorola, Inc. 2006.
     Statements in this press release that do not directly relate to historical
 facts constitute "forward-looking statements". These statements are based on
 +current expectations and are subject to numerous risks and uncertainties,
 many of which are outside of both companies' control. Such forward-looking
 statements include, but are not limited to, statements about: (1) benefits and
 synergies of the proposed transaction, (2) future opportunities for the
 combined company and products, and (3) the expected timeline for completing
 the transaction. The companies caution the reader that the actual events and
 results may be materially different than the anticipated results described in
 the forward-looking statements. The factors below, as well as the factors in
 Motorola's 2005 Annual Report on Form 10-K and in its other SEC filings could
 cause these differences. These factors include: (1) the companies' ability to
 consummate the transaction; (2) the possibility that the parties may be unable
 to achieve expected synergies and operating efficiencies from the transaction
 within the expected time-frames or at all; (3) operating costs, customer loss
 and business disruption (including, without limitation, difficulties in
 maintaining relationships with employees, customers, clients or suppliers) may
 be greater than expected following the transaction; (4) the retention of
 certain key employees at Continental; (5) the volatility of the international
 marketplace; and (6) the conditions to the completion of the transaction may
 not be satisfied, or the regulatory approvals required for the transaction may
 not be obtained on the terms expected or on the anticipated schedule. Motorola
 disclaims any intention or obligation to revise any forward-looking
 statements, whether as a result of new information, future event, or other

SOURCE Continental Teves