The merger of Siemens Automotive and the VDO business of Atecs Mannesmann AG will create one of the world's largest automotive suppliers and the industry's largest supplier of navigation systems.
The new joint venture, Atecs Siemens Automotive AG, will be 50 percent owned by Siemens AG and 50 percent by Atecs Mannesmann, both of Germany. It will begin July 1, subject to regulatory approval.
The new group will have combined sales of about $6.77 billion and a work force of 50,000. The new company will be 'the world leader in driver information, cockpit systems and car communication' said the parent companies.
The two suppliers have almost equal sales of about $3.38 billion each worldwide. Siemens Automotive is the larger player in the Americas. It ranks 33rd on the Automotive News list of top original-equipment suppliers to North America. Siemens had $1.3 billion in original-equipment sales to the continent last year.
The company supplies engine and body management electronics, wiring, fuel injectors and navigation systems.
Mannesman VDO had sales last year in North America of about $300 million. Those were mainly for cockpit instrumentation clusters and navigation systems. Half of its sales were in Germany. The company employs 300 people at its Rochester Hills, Mich., headquarters; Siemens Automotive, in Auburn Hills, Mich., has 650 people working in three complexes in metro Detroit.
The merger brings to a close an eight-year period in which the two companies have studied merging or spinning off divisions to each other, said Siemens spokesman David Ladd.
What they bring
VDO, with its background in instrumentation, has been one of the early leaders in the development of cockpit modules. It was responsible for the development of the cockpit systems for DaimlerChrysler's Smart car. It also has development contracts for other models that will come to market in the next few years. VDO is also one of the market leaders in the European navigation systems market through its acquisition last year of the Phillips Car Systems business.
Yet analysts had expressed doubts about VDO's ability to keep pace with the rapid growth of demand in this segment. Cockpits are among the most complex and demanding modules being considered for outsourcing by vehicle makers.
Siemens Automotive brings additional expertise and volume to the VDO cockpit business. The company has a joint venture with French supplier Sommer Allibert and has ambitions for the navigation system market. In addition, Siemens brings complementary strengths in body electronics. The new group will inherit leading positions in powertrain and safety electronics.
Both VDO and Siemens are active in fuel systems management. While VDO has specialized in fuel tank modules, Siemens is more active in engine components that meter fuel and air for the cylinders. The merger does give Siemens access to VDO's motorized throttle-by-wire technology, which the company supplies to BMW AG and DaimlerChrysler.
Goals & priorities
The new company intends to double its sales to $13.57 billion in the next five years. One priority will be to increase sales in Asia, where neither company has much of a presence.
Atecs Siemens will be based at a new location in Frankfurt. It will be headed by Franz Wressing, CEO of Siemens Automotive. The CFO will be Johann Loettner, CFO at Mannesmann VDO.
Atecs Mannesmann AG is the industrial arm of the Mannesmann Group, which was acquired by Vodaphone Airtouch PLC in February. VDO is the largest of the five companies making up Atecs group, accounting for 28 percent of its $11.94 billion in sales.
Atecs Mannesmann AG will be floated on the Frankfurt Stock Exchange in June.
Vodaphone Airtouch has said it will dispose of the rest of its holding in Atecs Mannesmann in the first quarter of 2001.
Staff Reporter Aaron Robinson contributed to this report