Mannesmann VDO and Phillips Agree on Take-Over of Phillips Car Systems
24 October 1997
Mannesmann VDO and Phillips Agree on Take-Over of Phillips Car Systems
Mannesmann VDO Expands Systems Business
SCHWALBACH AM TAUNUS, Germany, Oct. 24 -- Mannesmann VDO and
Phillips Electronics N.V. have signed a letter of intent covering
the acquisition of 65 percent of Phillips Car Systems (PCS) by Mannesmann VDO.
The remaining 35 percent will be bought by Mannesmann VDO after a two-year
period.
Final agreements will be signed before the end of this year, subject to
corporate and regulatory requirements. The agreed values of the PCS business
is approximately NLG 1,500 million on a debt-free basis.
Phillips Car Systems is a leading supplier of in-car navigation and
related communication/telematics systems and audio entertainment products.
Mannesmann VDO is one of the world's leading manufacturers of automotive
systems, with specific focus on information and traffic telematics systems.
The core competencies of Phillips Car Systems and Mannesmann VDO
complement one another ideally. Their joining together will create one of the
largest global suppliers of integrated information, navigation and traffic
telematics systems. In addition, Mannesmann VDO's access to the U.S. market
will be strengthened through PCS' Automotive Electronics unit (PAE).
Mannesmann VDO and PCS will occupy a leading position in the market for
navigation systems and telematic applications, which is expected to grow
dynamically in the years to come.
PCS, including PAE, will be incorporated in the Information Systems and
Control Systems businesses of Mannesmann VDO. However, PCS will continue to
operate autonomously, maintaining worldwide responsibility for its products,
markets and profit-and-loss accounts. The products will continue to be
marketed under the Phillips brand.
"This acquisition will considerably strengthen our systems capability. We
are, thus, positively responding to the needs of our customers, who
increasingly presuppose systems integration capabilities from their
development and manufacturing partners," says Dr. Peter Grafoner, chairman and
chief executive office of Mannesmann VDO, which has for years been at the
forefront of systems integration with its information, control and fuel
systems.
"In view of the worldwide trend in the automobile industry towards systems
integration and the increasing concentration on selected system partners, it
was clear that Phillips Car Systems could only successfully continue along its
path by considerably expanding its range. On our own we would have been too
small in the long run to grow successfully in the OEM business," adds Wouter
Dronkers, chief executive officer of Phillips Car Systems. "We are very
pleased that in Mannesmann VDO -- with which we have already engaged
successfully in a number of joint product developments -- we have found a
partner that wants to maintain our activities in their entirety, and which had
exactly the same strategic intentions for this fascinating growth market as we
have."
Mannesmann VDO develops and manufactures information, control and fuel
systems for the original equipment and aftermarket industries. The company
has 35 production facilities in 16 countries. VDO is the worldwide market
leader for information systems, producing nine million automotive cluster
instruments annually. The company enhances the broad traffic telematics
activities of the Mannesmann group with in-vehicles telematics terminals. The
VDO group employs more than 16,000 people and achieved, in 1996, annual sales
of DEM 3.7 billion.
The Mannesmann group's core business sectors are engineering automotive,
telecommunications, and tubes and trading. Sales generated in 1996 by the
group's 120,000 employees amounted to DEM 35 billion, more than half of which
was accounted for by customers outside Germany. Over one third of its work
force is employed outside Germany. Mannesmann ranks among the world's leading
suppliers in the areas of machinery and plant construction and automotive
technologies. Mannesmann Mobilfunk is the leading mobile telephone network
operator in Germany. Together with partners in Germany and Western Europe,
Mannesmann is developing further business segments in the growth market of
telecommunications. The capital stock of Mannesmann AG to the amount of
approximately DEM 1.84 billion is owned by some 200,000 shareholders, about
50,000 of whom are current or retired Mannesmann employees.
Phillips Car Systems develops, produces and markets in-car navigation,
information and communication systems, as well as audio entertainment products
for cars. Its U.S. subsidiary, Phillips Automotive Electronics, is active in
the fields of components for engine control, actuators and sensors -- as is
VDO. In 1996 alone, Phillips Car Systems produced four million car radios and
with CARIN also developed the first car navigation system ready for volume
production in 1994. The company, with its headquarters in Wetzlar, Germany,
expects to achieve sales of DEM 1.5 billion this year and employs 5,500 people
in 11 manufacturing facilities, six development centers and numerous sales
organizations on four continents.
Phillips Electronics is one of the world's largest electronics companies,
with sales of almost NLG 70 billion in 1996. Phillips employs approximately
262,500 people in more than 60 countries in the sectors: lighting;
semiconductors and components; consumer goods; professional products and
systems; and software and services. Its shares are traded on the stock
exchanges of New York, London, Frankfurt, Amsterdam and other major financial
centers. Phillips is a worldwide leader in lighting, color television,
electric shavers and music (PolyGram).
SOURCE Mannesmann VDO