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ElringKlinger AG

EANS-Adhoc: ElringKlinger AG close to acquiring cylinder-head and exhaust system gasket business of Freudenberg Group

  ad-hoc disclosure pursuant to section 15 of the WpHG transmitted by euro
  adhoc with the aim of a Europe-wide distribution. The issuer is solely
  responsible for the content of this announcement.
12.07.2010
Dettingen/Erms, Weinheim (Germany) July 12, 2010  +++  ElringKlinger 
AG, Dettingen/Erms, is planning to acquire the static metal gasket 
business -comprising the cylinder-head and exhaust system gasket 
business - of Freudenberg & Co. KG, Weinheim. Contractual 
negotiations have reached an advanced stage. Alongside the 
Freudenberg subsidiary Burgmann Automotive GmbH, Gelting, Germany, 
parts of Freudenberg-Meillor S.A.S., Nantiat, France, as well as 
Oigra Meillor s.r.l., Turin, Italy, are also to be taken over.
In implementing the planned acquisition, ElringKlinger will 
strengthen its international position within the field of 
cylinder-head gaskets and high- performance specialty gaskets for 
engines and exhaust systems.
The conclusion of the contractual agreement and the subsequent 
execution of the takeover are dependent on information and 
participation proceedings by employee representatives in France, as 
well as being subject to other standard provisions such as the 
approval of the transaction by the antitrust authorities. Subject to 
these approvals, ElringKlinger anticipates the contract can be signed
in September 2010 and that the transaction can come into legal effect
on October 1, 2010.
During the crisis year of 2009, the Freudenberg unit, which employs 
370 people, generated revenue of EUR 38 million. The forecast for 
fiscal 2010 as a whole suggests an operating result just slightly 
below break-even and revenue of approx. EUR 42 million, which would 
contribute pro rata to ElringKlinger's consolidated revenue effective
from the date of acquisition. For 2011, the revenue target stands at 
almost EUR 50 million. ElringKlinger is of the opinion that the 
operating margin could be brought closer to that of its own level for
the Group by 2012 at the latest. In total, the transaction would be 
earnings accretive as from 2011.
Both parties to the contract have agreed not to disclose details of 
the planned purchase price. The purchase price could possibly be 
within a range of 0.6 to 0.8 times expected revenue for 2011.
Complementary technology for exhaust system gaskets and strengthening
of market position The acquisition of the static metal gaskets 
business from the Freudenberg Group will allow ElringKlinger to 
cement its position within the market for flat gaskets. In the area 
of specialty gaskets, the company will have the opportunity to extend
its portfolio by adding new products and applications, e.g. in the 
rapidly growing segment of turbochargers and exhaust recirculation, 
as well as capturing additional market share among French and German 
vehicle manufacturers as well as in Italy.
The ElringKlinger Group's cylinder-head and specialty gaskets 
divisions generated revenue of EUR 150 million as part of original 
equipment sales to automobile manufacturers in 2009, corresponding to
26% of Group revenue.
Industry consolidation presents interesting opportunities for 
acquisitions ElringKlinger anticipates a more pronounced rate of 
consolidation within the automotive supply market, which - beyond 
organic growth generated through new products - will offer the 
company good opportunities for targeted technology- driven 
acquisitions as well as the expansion of market share in existing 
fields of business. Within this context, the scope of such 
acquisitions is to remain manageable in order to ensure rapid, 
earnings-focused integration.
end of announcement                               euro adhoc

Further inquiry note:

ElringKlinger AG Corporate Communications
Max-Eyth-Straße 2, 72581 Dettingen/Erms
Tel.: +49 (0)7123-724-640 / 137
Fax: +49 (0)7123-724-641
E-mail: stephan.haas@elringklinger.de
karl-heinz.app@elringklinger.de

Branche: Automotive Equipment
ISIN: DE0007856023
WKN: 785602
Index: MDAX, Classic All Share, Prime All Share
Börsen: Frankfurt / regulated dealing/prime standard
Berlin / free trade
Düsseldorf / free trade
München / free trade
Stuttgart / regulated dealing

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