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Motorola agreed to sell its worldwide automotive electronics business to Continental AG on April 3, 2006, for an announced purchase price of US$1 billion. Motorola announced that the sale was completed on July 3, 2006. The $1 billion figure was the agreed price; Motorola later reported different net-cash figures in its quarterly and annual filings.
What Motorola sold
The transaction covered Motorola’s worldwide automotive electronics business, not Motorola as a whole or a consumer vehicle brand. The business made electronic control units for powertrain, chassis-control and interior applications. Its portfolio also included sensors, interior electronics and embedded telematics products that connected vehicles with external networks for functions such as telecommunications and navigation. Continental’s April 3, 2006 announcement described the acquired areas as vehicle controls, sensors, interior electronics and telematics.
At the time of the announcement, Continental reported that the business had generated approximately US$1.6 billion in 2005 revenue, was profitable, and employed about 4,500 people. It cited major production and engineering facilities in the United States, Mexico, France and China. Those are historical figures reported in 2006, not current operating statistics.
When the sale was announced and completed
- April 3, 2006: Continental announced its agreement to acquire the business for US$1 billion, subject to regulatory clearance and other closing conditions. Continental’s announcement also set out the business’s products and reported 2005 revenue.
- June 23, 2006: Continental said the European Commission had approved the deal and that U.S. Hart-Scott-Rodino waiting-period clearance had also been received. It expected closing in July. Continental’s regulatory update reported those clearances.
- July 2, 2006: The former Motorola unit began operating as Continental, according to Motorola’s completion announcement. That announcement noted that China assets and employees would transfer once remaining conditions were satisfied.
- July 3, 2006: Motorola announced completion of the sale. Its annual reporting later confirmed that the transaction was completed during 2006.
Motorola’s newsroom is the source for the July completion announcement and its details about the unit’s transition.
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How much did Motorola receive?
Continental announced an agreed purchase price of US$1 billion on April 3, 2006. That is the transaction price stated when the agreement was announced; it should not be treated as identical to the net cash amounts Motorola later reported.
| Figure | What it represents | Source and context |
|---|---|---|
| US$1 billion | Announced purchase price | Continental’s April 3, 2006 agreement announcement. |
| Approximately US$919 million | Net cash received for the sale of substantially all of the automotive electronics business | Motorola’s third-quarter 2006 filing, which described the sale as completed in July. |
| US$856 million | Net cash received from the sale; Motorola also reported a US$399 million pretax gain | Motorola’s 2006 annual report, published in 2007. |
The quarterly and annual net-cash amounts differ, and the available filings do not explain the difference. They should be attributed to their respective filings rather than treated as corrections to one another. Neither net-cash figure is the business’s 2005 revenue.
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Why Continental wanted the business
Continental said the acquisition would add telematics to its product range and expand its capabilities in body and sensor electronics, powertrain and chassis controls. It presented the purchase as a strategic fit, including for safety systems; that was the buyer’s stated rationale, not a measured account of the deal’s later results. In the April 3 announcement, Continental Executive Board chairman Manfred Wennemer said, “Motorola’s automotive electronics business is a perfect fit with our strategy of providing sophisticated safety systems to our customers.”
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- INDUSTRIAL ELECTRONIC DISTRIBUTOR: Complete ignition distributor with integrated Ignitor module; replaces point-type Delco & Prestolite distributors with a maintenance-free electronic ignition system
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- COMPATIBILITY: For Continental F6 Series 6-cylinder engines: F170, F186, F209, F218, F224, F226, F244, F6170, F6186, F6209, F6226, F6244 (1940-1965) and F227, F245, F6227 (1965-Present)
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- INDUSTRIAL ELECTRONIC DISTRIBUTOR: Complete ignition distributor with integrated Ignitor module; replaces point-type Delco & Prestolite distributors with a maintenance-free electronic ignition system
- IGNITOR ELECTRONIC IGNITION TECHNOLOGY: Precision module switches higher energy than traditional systems, delivering improved combustion efficiency, faster starts, and reduced maintenance downtime
- CONTINENTAL ENGINE COMPATIBILITY: Designed for F4 Series (F124, F140, F162, F163) and Y4 Series (Y69, Y91, Y112) 4 cylinder engines; supports gas, propane, and LP industrial applications
- PRECISION TIMING PERFORMANCE: Maintains ignition timing within 1/4° accuracy down to zero RPM with an effective operating range from 0 to 6,000 RPM for consistent engine performance
- DURABLE INDUSTRIAL DESIGN: Lightweight aluminum housing with superior venting system and O-ring seal helps reduce heat buildup and prevent oil leakage. Matching coil part number 40501, 40511 & 40611 available
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