LONDON (April 23, 2001)— Continental AG will fold Temic into a new, still unnamed automotive electronics business when the German tire and component group gains control of the DaimlerChrysler unit.
Continental has agreed to acquire 60 percent of Temic for a price that values the complete business at some 630 million euros, or about $558 million at current exchange rates. The deal is awaiting approval by European regulators.
Temic produces sensors, electric motors and electronics for engine management, chassis and comfort systems. It had sales of about $975 million in 2000, and 5,800 employees worldwide.
Temic will be headed by Wolfgang Ziebart, CEO of Continental's Teves unit, but will remain operationally distinct, said a company spokesman.
Continental Teves specializes in electronic braking and chassis control systems. It is Temic's biggest customer, accounting for a third of sales. DaimlerChrysler makes up another third.
Continental Teves buys sensors for its antilock braking and electronic stability program systems from Temic. The two companies also have a two-year-old joint venture in distance control, or distronic, systems.
Continental's Temic deal marks another major step away from the commodity tire business. It is the latest stage in Continental's strategy to establish itself as a systems-based chassis and ride control supplier.
The acquisition of Temic is "a major advance in our strategy to restructure Continental into an integrated system supplier for complete chassis systems," said Stephan Kessel, Continental chairman.
Continental expects to retain all of the newly acquired Temic businesses for the foreseeable future, even those in areas not related to chassis or ride control.
The separation of Temic from DaimlerChrysler should result in additional opportunities to win advanced technology projects with DCX competitors, said a Continental spokesman.
Mr. Chew writes for Automotive News, a sister publication of Tire Business.