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Bosch and Rexroth head for a merger

01 May, 2000

The automation business of Robert Bosch is likely to be merged with Mannesmann`s Rexroth operation following Bosch`s successful joint bid with Siemens for Mannesmann`s engineering arm, Atecs.

The bid, reported to be worth €9.6bn (£5.8bn) - raised from an original offer of €9.1bn (£5.5bn) - was accepted by Mannesmann`s supervisory board last month in preference to an alternative €8.75bn (£5.3bn) bid from Thyssen Krupp.

In accepting the Siemens-Bosch bid, the board also abandoned its earlier plan to float Atecs. Siemens` main interest in Mannesmann is its VDO automotive electronics business, but Bosch has its eye on the Rexroth activities which complement those of its own automation division.

The £1.7bn Rexroth business includes an hydraulics operation, a foundry business, and the three automation businesses - Indramat, covering drives and controls, Mecman, serving the pneumatics market, and Star, specialising in linear mechanical motion. Bosch says it plans to merge the Rexroth automation businesses with its own, but this is unlikely to happen before the autumn.

The takeover deal still has to obtain regulatory approval. Although there are obvious overlaps and duplications between the Bosch and Rexroth operations, Bosch and Siemens are committed to maintaining Atecs` plants, management structures and operating independence for at least three years.

Bosch`s automation technology division has a staff of 4,600; Rexroth`s automation operation (including its hydraulics and foundry businesses) employs 21,000.

The fate of Mannesmann`s other engineering businesses, including the Dematic materials-handling operation, and the Demag Krauss-Maffei compressor and process business, is not clear. However, Bosch and Siemens say that these activities will be expanded and enhanced through co-operation with the new parents` corresponding operations.

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