BenQ Buys Siemens Phone Unit

MUNICH -- The Taiwan-based BenQ Group, which also produces mobile phones in addition to other consumer electronic products like digital cameras, scanners and LCD screens, will acquire Siemens’ entire mobile phone business with more than 6,000 employees worldwide. The business will be headquartered in Munich. The closing of the deal is expected in the fourth quarter of Siemens’ fiscal year 2005. “With this partnership, we have found a sustainable perspective for our mobile phones business. BenQ and Siemens complement one another ideally. We will be uniting our strengths with BenQ’s highly successful consumer business. In addition, we also complement one another perfectly in terms of geography. This will give BenQ, which up until now has been very strong in Asia, access to the European and Latin American markets where we hold leading positions,” said Klaus Kleinfeld, the CEO of Siemens AG.

Siemens will invest in BenQ by purchasing shares of the company. In addition, the transaction also includes the rights to the brand and name, which BenQ will be allowed to use for a total of five years. BenQ Chairman & CEO K.Y. Lee: “With the acquisition of Siemens’s mobile phones business, we are rapidly approaching our goal to become one of the world’s leading players in the mobile phone industry. Our expansion strategy will be strongly supported by this deal, as we can rely on a global organization with excellent employees, a well-established blue-chip customer base in the mobile business and a strong brand with high impact. I welcome the addition of Siemens’s management resources and look forward toworking with the Siemens team on the combined platform. I am fully convinced that the acquisition provides many opportunities to strengthen our business in the consumer market and I am sure that our shareholders will share this opinion.”

With this acquisition, BenQ will advance to become one of the world’s leading mobile phones vendors. The two partners complement one another ideally in their strengths. In addition to its GSM mobile phones activities, the Taiwan-based company is also a leading vendor of consumer electronic products, such as LCD screens, notebook computers, cameras and scanners. The acquisition will strengthen BenQ’s GSM mobile phones business. BenQ intends to expand mobile devices into a core business in the future.

On its Asian home market, BenQ already numbers among the fastest-growing vendors in the mobile phones segment. The partnership with Siemens will enable BenQ to implement its ambitious plans for international expansion. Siemens offers BenQ a globally operating organization that enjoys leading market positions in both Western and Eastern Europe as well as in the growth market of Latin America. Through the acquisition, BenQ will also obtain a world-famous brand name, mobile telephony technology and software competence, as well as global access to Siemens’ broad customer base. Moreover, BenQ will also acquire Siemens’ outstanding manufacturing operations on three continents.

With BenQ, Siemens has found the ideal partner for continuing and securing the mobile phones business over the long term to the benefit of its employees, customers and suppliers. BenQ will be acquiring all of Siemens’ development and manufacturing locations in Manaus (Brazil) and Kamp-Lintfort (Germany), along with headquarters functions as well as the sales and marketing organization. The factory in Shanghai (China), which is operated as a joint venture together with a Chinese partner, will also remain a development and manufacturing location. BenQ guarantees full utilization of the capacity at the location for a period of three years. Subject to the agreement of our partner in this joint venture, BenQ will also take over this capacity in the next step.

“For us, continuation of the company location in Kamp-Lintfort was an important factor in deciding on a buyer. As agreed upon in the supplementary collective bargaining agreement, we have thus created good prospects for the future for our people. At the same time, the measures settled with our employees have played a crucial role in securing the competitiveness of this facility,” said Kleinfeld.

The two companies have agreed to partner closely. In the course of the transaction, Siemens will acquire new BenQ shares worth EUR 50 million and will be building upon BenQ as a preferred partner for end-to-end mobile communication solutions. “Siemens will continue to offer its customers in the telecommunications industry one-stop shopping for all their needs. With BenQ, we have found a partner who will supply us with the corresponding products. In addition, we will be collaborating closely in research and development. Moreover, we also intend to utilize synergies in jointly addressing customers and in our selling operations,” noted Lothar Pauly, the CEO of the Siemens Communications Group.

The Supervisory Board of Siemens AG, Berlin and Munich, and the Board of BenQ have agreed to the transaction. The agreement remains subject to approval by a shareholders’ meeting of BenQ.

Siemens AG