Daimler-Benz News from March 16, 1995

ABB and Daimler-Benz
to merge rail activities

Joint venture creates
strong new global competitor

March 16, 1995, Berlin/Stuttgart, Germany and Zurich, Switzerland
ABB, the international electrical engineering group and the German technology group Daimler-Benz will announce at a press conference in Berlin today the merger of their worldwide rail transportation activities into a 50-50 joint venture company to be called ABB Daimler-Benz Group Transportation.

The two companies announced in a joint press release that the new group will consist of around 50 companies, incorporating ABB's worldwide Transportation Segment and the rail activities of Daimler-Benz corporate unit AEG Aktiengesellschaft. In view of the difference in size and profitability between the two partners, Daimler-Benz will compensate ABB to the amount of US$ 900 million.

The joint company, by combining the strengths of both groups - Daimler-Benz in transportation systems and mechanical engineering and ABB in electrical engineering - will be one of the leaders in the global rail transportation market. It will employ 22,000 employees in some 40 countries, with its coordination center intended to be located in Berlin. The 1995 order intake is estimated at about ECU 4.4 billion (currently DEM 8.043 billion). Both partners expect the joint venture to achieve a level of profitability not possible separately.

ABB Daimler-Benz Transportation will offer full rail system solutions, from design and engineering to assembly and project management. Products and systems will include advanced locomotives, high-speed and tilting trains, modular urban transit rail systems, low-floor trams, advanced signaling and automated train protection systems and people movers.

The company will serve intercity and mass transit urban markets both in industrialized countries and emerging markets around the world. The greater economies of scale that will result from the merger will also help the new company to deliver more cost-competitive products and systems.

The new group will operate as a separate entity from either of the parent companies. However, ABB Daimler-Benz Transportation will retain close relationships with both Daimler-Benz and ABB in R&D, financial engineering, supply management, marketing and sales and other areas.

President and CEO of the joint company will be Mr. Kaare Vagner, presently Executive Vice President and head of ABB's transportation segment. The chairman of the new company's Board will be Mr. Ernst G. Stöckl, member of the Board of Management of Daimler-Benz AG and Chairman of AEG Aktiengesellschaft.

The proposed merger is subject to approval by the ABB Boards as well as the Daimler-Benz Group Supervisory Boards, and the appropriate European regulatory authorities.

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