At its meeting on March 31, 2000, the Supervisory Board of Thyssen Krupp AG adopted the plan of the Executive Board to submit an offer to buy 100% of Atecs Mannesmann. This encompasses the entire worldwide business of Rexroth, Dematic, Demag Krauss-Maffei, VDO and Sachs with sales of around Euro12 billion and around 90,000 employees. This offer was communicated to Mannesmann - as announced - after the ThyssenKrupp Supervisory Board meeting.

Why is ThyssenKrupp looking to buy Atecs Mannesmann?

ThyssenKrupp as a major German industrial concern is faced with a series of challenges. These include

･ the new phase of globalization,
･ the increasing penetration of the economy by e-commerce,
･ the advancing consolidation of customers, especially in the automobile industry and
･ intensifying competition for good staff and managers.

To meet these challenges businesses need critical mass. Customers expect an attractive product and service package, workers and managers want jobs with perspectives.

ThyssenKrupp and Atecs Mannesmann would be a "growth merger". The complementarity of activities and the joint size would create a new joint platform from which to address the markets even more successfully.

The acquisition of Atecs Mannesmann would be a logical continuation of the strategic realignment of ThyssenKrupp adopted in December 1999.

What is necessary is either a large number of individual steps and individual acquisitions in specific core businesses to reach or consolidate leadership positions or a quantum leap to take the Group and its businesses into a new dimension. A ThyssenKrupp/Atecs Mannesmann tie-up would be such a quantum leap.

That is why ThyssenKrupp is convinced that the combination makes industrial sense against a background of increasing competitive pressure and that compared with all other strategies this tie-up offers the best opportunities for the companies involved. The growth strategies being pursued by both companies can be implemented faster and more successfully on a joint basis.

How is Atecs Mannesmann set up?

Atecs Mannesmann has strong, independently run individual businesses. Rexroth, Dematic, Demag Krauss-Maffei, VDO and Sachs are leaders in their respective sectors. 75% of sales are generated in engineering and automotive with products that hold leading positions worldwide.

From ThyssenKrupp´s perspective, a Siemens/VDO joint venture as targeted by Atecs Mannesmann is a sensible strategic step. ThyssenKrupp assumes that even after an acquisition of Atecs Mannesmann the joint venture will go ahead.

Where does the strategic potential of the tie-up lie?

In the automotive sector the highly profitable mechanical capabilities of ThyssenKrupp will combine with the high-growth electronics capabilities of Atecs Mannesmann.

･ A suspension technology network will be created that covers all damping systems of the future.
･ Development and production of powertrain systems will be possible; for example, precision forgings for transmissions and differentials, system supplier for automatic transmissions, electronic clutch systems.
･ The cockpit of the future will be created as a complete system through collaboration by Krupp Presta in steering columns, Krupp Drauz and Camford Pressings in structural parts together with the electronics capabilities of VDO.
･ In regional terms, too, the two companies are a great fit: ThyssenKrupp is strong in the USA and South America, while Atecs Mannesmann is present in Asia and Eastern Europe.

ThyssenKrupp and Atecs are already working closely together today. For example, Krupp Presta and VDO are collaborating on electric power assisted steering systems, and on the dash panel for the Smart. Thyssen Umformtechnik + Guss Brackwede and Sachs are cooperating on sheet metal stampings, and Kloth Senking and Sachs are working together in a development partnership for the Audi B 6.

The collaboration with Siemens would be a further opportunity as it would strengthen our electronics capabilities. Without Siemens, ThyssenKrupp and Atecs Mannesmann would be the world´s number 9 automotive supplier; with Siemens they could establish a position in the top 5.

The picture in engineering is no different. Combining the activities of ThyssenKrupp and Atecs opens up the opportunity to become a leading global supplier of technically advanced engineering components and systems. Dematic is already world number 1 in material handling, Rexroth occupies the same position in hydraulics. ThyssenKrupp Elevators is third in the world rankings, Rothe Erde, Rexroth and Berco are number 1 in engineering components. Cooperation between ThyssenKrupp Plastics Machinery and the plastics equipment business of Demag Krauss-Maffei would also give us a strong position in this field.

In engineering it is not just products that fit so ideally, but regional presence as well: ThyssenKrupp is strong in Europe and America, Atecs Mannesmann in Asia.

Cooperation as partners

ThyssenKrupp already has experience of bringing together major corporations, as demonstrated by the successful merger of Krupp and Hoesch and the creation of the ThyssenKrupp Group. These examples illustrate our ability to join together harmoniously companies with different traditions. This will also be the case with Atecs Mannesmann.

Based on the talks held between ThyssenKrupp and Mannesmann, the following key points will be part of an integration plan:

･ Atecs Mannesmann will remain as a unit with its own executive board and supervisory board for 2 to 3 years.
･ During this time ThyssenKrupp intends to continue the concentration on the core businesses automotive, elevators and machinery as resolved and to further develop the service activities. In parallel with this, the flotation of ThyssenKrupp Steel will be implemented.
･ The spin-off, the flotation and the intended disposal of ThyssenKrupp activities will allow the financing of the purchase price for Atecs Mannesmann to be largely repaid after two to three years.
･ In this time Atecs Mannesmann can generally continue the strategies resolved for all five activities. There are no plans to sell activities of Atecs Mannesmann to finance the purchase price. Industrially motivated changes to the portfolio overall will not be affected.
･ The compensation systems currently practiced at ThyssenKrupp and Mannesmann, e.g. stock options or phantom stocks, are to remain - in harmonized form - part of a compensation system in the future.
･ The chairman of the supervisory board and the chairman of the executive board of Atecs Mannesmann are to be members of the Executive Board of Thyssen Krupp AG. This will ensure transparency, motivation and integration of Atecs Mannesmann.

The aim of this proposal is to motivate the employees of Atecs Mannesmann as equal-ranking partners. Fears that the merger will result in plant closures or even the loss of 1,000 jobs are completely without foundation.

Purchase price and financing

On the basis of the documents received from Mannesmann, ThyssenKrupp has calculated an enterprise value of Euro 8.75 billion for Atecs Mannesmann.

The purchase price to be paid by ThyssenKrupp is derived from this enterprise value less the pension accruals allocable to Atecs Mannesmann at December 31, 1999 (calculated under US GAAP) and the net financial payables of Atecs Mannesmann at the closing date.

ThyssenKrupp is in possession of a binding financing commitment.

ThyssenKrupp has a range of refinancing options with regard to the acquisition financing, including through the planned flotation of ThyssenKrupp Steel in the year 2000. Other divestitures are planned within the framework of ThyssenKrupp´s strategic realignment. The cash inflow is to be used to repay the acquisition financing. The sale of companies and parts of Atecs Mannesmann is not part of the financing plan.

A sound financing plan to purchase 100% of Atecs Mannesmann is thus in place.

Creation of a new global group based in Germany

The tie-up with Atecs Mannesmann is consistent with the strategic realignment of ThyssenKrupp: the concentration on core businesses is clearly focused on automotive, high-quality engineering and innovative services. The tie-up also brings with it high potential for B2B business. A worldwide service network will be created.

Together, ThyssenKrupp and Atecs Mannesmann´s activities would span the world. Germany would be the control center for a new global group providing high-value capital goods and services. Around 80% of sales are complementary or overlap, which means that a combination would result in a significant strengthening of the respective activities. Europe´s leading engineering and automotive company would have an excellent platform for growth in Germany, Europe and the world.