BORGWARNER ANNOUNCES VOLUNTARY PUBLIC TENDER OFFER FOR BERU AG
01 November 2004 - BERU

- Access secured to about 63% of the shares in BERU AG- Voluntary public tender offer of Euro 67.50 per share

BorgWarner Germany GmbH, Heidelberg, a subsidiary of BorgWarner Inc. of Wilmington/Delaware, U.S.A., today informed BERU that a definitive share purchase agreement for 62.21% and a share purchase option agreement for 0.82% totaling around 63% from major shareholders (The Carlyle Group and a group of family shareholders) have been signed. The closing of the share purchase agreement and the exercise of the share purchase option agreement are subject to regulatory approval of the relevant authorities.

In addition, pursuant to the German Takeover Law (Wertpapiererwerbs- und Übernahmegesetz), BorgWarner Germany GmbH today disclosed its decision to launch a public tender offer for the shares in BERU AG for a price of Euro67.50 per share and duly notified the company of this decision. This price represents a premium of 14.7% compared with the volume-weighted average price of the shares of BERU AG over the last twelve months (Euro 58.87) and 12.4% above the closing price (Euro 60.07) in XETRA trading on the day before the publication of the decision. It is thus 252.1% above the shares’ issue price of Euro 19.17 in October 1997. Assuming that the acquisition of all the remaining shares in BERU takes place, the equity value of the transaction would be around Euro 621 million.

Subject to the examination of the offering documents to follow, the BERU Management Board regards the planned takeover as a positive strategic step. According to the information available to the Management Board, BERU’s independence is to be fully maintained after the takeover by BorgWarner.

It is intended to manage the company as a strategically important business unit of the BorgWarner Group. Both companies are successful as “diesel players” with their products in the globally expanding diesel sector of the automotive market and in the field of automotive electronics and sensorics. The product portfolios of BERU and BorgWarner complement each other without any overlaps.

Positive synergies may result in future from the mutual use of customer relations and from the companies’ geographic presence. On the one hand this move is meant to improve the position of BERU in the strategically important markets of North America and Asia, on the other hand to further strengthen the activities of BorgWarner in Europe.

BERU will continue to make significant investments in research and development, providing a basis for sustained future business success.

In view of the complementary character of the planned takeover in terms of products and markets, the BERU Management Board assumes that the takeover will not result in any changes in the employment situation at BERU Group.

The Chairman of the Management Board of BERU, Marco v. Maltzan, has stated on the public tender offer announced today: “The complementary product ranges and the opportunities emerging for BERU from the cooperation with BorgWarner as a strategic partner in the regions of North America and Asia will assist BERU in continuing its existing growth path over the long term.“

At present, the Management Board of BERU can only make provisional comments on the announced public tender offer. According to the German Takeover Law (Wertpapiererwerbs- und Übernahmegesetz), BorgWarner now has a period of up to four weeks to prepare the offering documents for the shareholders and for submission to the German Financial Services Authority (BaFin). BaFin will examine these offering documents, and they will subsequently be published. The Management Board and the Supervisory Board of BERU AG will then issue reasoned opinions.

BorgWarner is a leading OEM supplier in the automotive industry with worldwide activities and a listing at the New York Stock Exchange. The focus of its products is in the field of drive-train components and systems. BorgWarner Group has a workforce of 14,300 employees in 14 countries and generated annual revenues of Euro 2.4 billion in 2003. BorgWarner has been active for 50 years in Germany, where it currently employs 3,000 people.

BERU Aktiengesellschaft, of Ludwigsburg, Germany, has had a stock-exchange listing since October 1997. In its 2003/04 financial year, it achieved revenues of Euro 354 million with a worldwide workforce of 2,700 employees. It is the world’s leading supplier of diesel cold-start technology with an estimated 40% share of the world market for glow plugs for diesel engines. In the field of ignition technology for gasoline engines, the company is one of the four major European suppliers. BERU is expanding rapidly in the area of electronics and sensor technology with a focus on complete system solutions for the automotive industry. BERU is the leading supplier of electronic tire-pressure monitoring systems for the German automotive industry. Nearly all of the world’s automobile and engine manufacturers are customers of BERU.

www.beru.de

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