Beru AG Deal Expands BorgWarner's Presence in Rapidly Growing Diesel Market and Electronics

AUBURN HILLS, Mich., Jan. 4, 2005 -- BorgWarner Inc. announced today that, through one of its wholly-owned German subsidiaries, it has completed the purchase of approximately 62% of the outstanding shares of German-based Beru AG from its major shareholders, The Carlyle Group and a group of family shareholders. The purchase was a cash transaction at a price of euro 59 per share or euro 367 million (approximately US $490 million at current exchange rate of 1.335). Of the euro 367 million in financing, euro 240 million was borrowed locally and the remainder was funded by available cash balances.

"We are excited to team up with Beru, a technology leader much like BorgWarner," said Timothy M. Manganello, Chairman and CEO of BorgWarner. "Having a majority ownership in Beru gives us additional access to the fast- growing diesel market and enhances our sensor and engine electronics expertise. In addition, Beru's technology and product expertise complements and strengthens our market presence with global automakers. Beru produces excellent products, has an expanding business in one of the fastest growing sectors of the automotive market, and has a strong and well-respected senior management team. We intend to maintain Beru as a stand-alone business of BorgWarner within our Engine Group and do not anticipate employment changes as a result of this transaction."

The transaction is expected to be accretive to earnings beginning in 2005. Beru results will be consolidated within the BorgWarner Engine Group beginning in the first quarter of 2005.

Headquartered in Ludwigsburg, Germany, Beru AG is a leading global automotive supplier and manufacturer of diesel cold starting technology (glow plugs and instant starting systems); gasoline ignition technology (spark plugs and ignition coils); and electronic and sensor technology (tire pressure sensors, diesel cabin heaters and selected sensors.) Beru's major customers include, among others, BMW, DCX, GM/Fiat, VW/Audi, Ford, Porsche, PSA, Renault, Isuzu, Siemens VDO, Valeo, Deutz, and MAN. Beru employs approximately 2,700 employees. On a trailing twelve-month basis ending September 30, 2004, Beru's net income was euro 36.8 million excluding exceptional items on sales of euro 379.9 million.

BorgWarner Inc. is a product leader in highly engineered components and systems for vehicle powertrain applications worldwide. The company operates manufacturing and technical facilities in 43 locations in 14 countries. Customers include Ford, DaimlerChrysler, General Motors, Toyota, Honda, Hyundai/Kia, Caterpillar, Navistar International, Renault/Nissan, Peugeot and VW/Audi.

Additional Information

BorgWarner Germany GmbH, a wholly-owned subsidiary of BorgWarner Inc. (the "Company"), has commenced, in accordance with German law, a public tender offer (the "Tender Offer") for all of Beru AG's remaining outstanding stock. This Tender Offer is not being made directly or indirectly in or into the United States, or by use of the mails of, or by any means or instrumentality (including, without limitation, the mail, facsimile transmission, telex or telephone) of interstate or foreign commerce or any facilities of any national securities exchange of the United States. The Tender Offer will not, and should not, be accepted by any such use, means, instrumentality or facility involving or from within the United States, and United States persons will not have the Tender Offer available to them, directly or indirectly, within the United States. Accordingly, information regarding the Tender Offer is not meant for publication or distribution in or into the United States nor does it represent an extension of a tender offer into the United States.

This communication is for information purposes only. It shall not constitute an offer to purchase, sell or exchange or the solicitation of an offer to purchase, sell or exchange any securities of Beru. The distribution of this news release may, in some countries, be restricted by law or regulation. Accordingly, persons who come into possession of this document should inform themselves of and observe these restrictions.