EU Commission Approves Siemens’ Acquisition of VA Tech

The EU Commission has approved Siemens’ bid to take over Austria’s VA Technologie AG (VA Tech). The decision was announced in Brussels today. This marks the conclusion of the antitrust review of the takeover offer made by Siemens AG Österreich in December 2004. When the deal is closed in a few days, Siemens will hold 97.15 percent of the VA Tech stock. The purchase price is approximately 1 billion euros. For competitive reasons, the European antitrust regulators did not approve a merger of the VA Tech hydropower activities with Siemens. As a result, Siemens will immediately initiate the sale of the VA Tech power generation unit.

Sales of the metallurgy, power transmission and distribution, and infrastructure units, which will now be integrated into Siemens, totaled over 3 billion euros in 2004. Around 13,000 people are employed in these three business segments. The power generation unit posted sales of just under 900 million euros in 2004 with approximately 3,000 employees.

“The overall strategic goals have been reached with the takeover of VA Tech,” said Dr. Klaus Kleinfeld, CEO of Siemens AG, following the Brussels decision. “Our focus in this acquisition was on the metallurgy and power transmission and distribution businesses. In these areas, the VA Tech portfolio and regional presence are an outstanding fit for our Industrial Solutions and Services (I&S) and Power Transmission and Distribution (PTD) Groups, respectively, and support their global growth targets. In addition, our takeover of the infrastructure activities will considerably strengthen Siemens’ already solid market position in Austria and push the expansion of our business, such as in the dynamic markets of Eastern Europe. The antitrust conditions met our expectations.”

“The Commission’s decision marks a milestone in the development of the Siemens Group in Austria and in the country’s overall industrial landscape,” commented Albert Hochleitner, General Director of Siemens AG Österreich. “Siemens will be one of the biggest industrial companies in Austria. The nearly one-year takeover formalities are thus coming to a close for the good of all parties. We will now work hard to implement the integration as quickly as possible.”

The infrastructure unit of VA Tech (comprised of VA Tech Elin EBG and ai informatics), which largely operates in Austria and Eastern Europe, will be merged with Siemens Österreich. This takeover will substantially strengthen and broaden the overall portfolio of Siemens Österreich and enhance the infrastructure business of VA Tech. The merger creates the largest Austrian provider of electrotechnical equipment, systems and services for industry, building and communal infrastructure, and for IT services. In fiscal 2004, VA Tech posted sales of nearly 900 million euros with around 3,900 employees in this sector. With this merged business, Siemens Österreich can pursue an even more aggressive growth strategy in Central and Southeast Europe.

Siemens will fully integrate the metallurgy business of VA Tech – Voest Alpine Industrieanlagenbau (VAI) – into its Industrial Solutions and Services Group (I&S), headquartered in Erlangen, Germany. VAI, which had sales of roughly 1.2 billion euros in 2004 with about 3,400 employees, will operate as an I&S Group Company with headquarters in Linz, Austria, under the name Siemens VAI. Siemens and VAI will be one of the world’s leading providers for developing and constructing iron, steel and aluminum plants. While VAI previously focused above all on developing technical solutions for the mechanical side of plant construction, I&S concentrated on electrotechnical equipment. As a result of the merger, the mechanical and electrotechnical sides of the industry will be bundled for the first time in the hands of a single provider.

The power transmission and distribution unit (T&D) of the Austrian company will be incorporated into the Siemens Power Transmission and Distribution Group (PTD), which is headquartered in Erlangen, Germany. This will enable Siemens to further reinforce its position as one of the leading international companies in this sector and provide a solid basis for sustained growth. PTD will merge VA Tech’s entire T&D business with switchgear, transformers and automation solutions into its own High Voltage, Transformers, Energy Automation and Services Divisions. VA Tech T&D had sales of 1.1 billion euros in fiscal 2004 and around 5,400 employees.

Following the closing, it is intended to initiate a squeeze-out procedure in order to buy out the remaining owners of VA Tech shares in scattered holdings and to undertake a delisting of VA Tech.

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