Auto parts giant plans Chinese acquisition

CONTINENTAL AG yesterday announced plans to acquire Zhangjiagang Fugang Heli Electronics Co Ltd, the first time Continental's automotive division has taken over a Chinese company following a series of mergers overseas.

The acquisition is expected to further help Continental, Europe's second-largest auto parts maker, to diversify its product portfolio from braking systems and become an integrated systems supplier.

The deal is subject to regulatory approval.

Fugang Heli, founded in 2005, makes cooling fan modules and window lift motors and has around 250 employees.

In 2006, the Zhangjianggang, Jiangsu Province-based company achieved sales of 84 million yuan (US$11.2 million). It runs two production facilities serving major domestic car makers such as FAW Volkswagen and Chery.

"With the acquisition of Fugang Heli, Continental Automotive Systems will enhance the local production capability in order to better meet the demand of OEMs in China," said Karl-Thomas Neumann, president of Continental Automotive Systems and a Continental AG executive board member, referring to original-equipment manufacturers.

"It will be a new base for export into other regions in Asia based on cost-competitive manufacturing."

The deal in China, considering a driving force in the Asia-Pacific region, came after several similar acquisitions on the global market as the company took on rivals like Bosch AG.

In mid-August, Continental spent 11.4 billion euros (US$15.5 billion) to buy Siemens VDO Automotive AG in the biggest acquisition of its 136-year history, nearly one year after acquiring the automotive electronics division of Motorola.

A month earlier, Continental announced it will invest 48 million euros to build an automotive engineering center in Shanghai, which will also host its Asia headquarters.