HSBC Private Equity announces the acquisition by TMD Friction of the automotive and industrial friction business of RÜTGERS AG for an undisclosed sum. On behalf of TMD Friction, HSBC Private Equity raised financing of
€125 million in support of the transaction.

HSBC Private Equity is the majority shareholder of TMD Friction, having led and arranged the €776 million management buy out of TMD Friction from BBA Group plc in August 2000. TMD Friction is the European market leader in the manufacture of automotive friction products with its headquarters based in Leverkusen, Germany.

The automotive and industrial friction business being acquired by TMD Friction has been part of RÜTGERS AG since 1964. Its main operations are based at Essen, Germany. The business generated revenues of €175 million in the year to 31 December 2000, and major customers include General Motors, Volkswagen and DaimlerChrysler. The business trades under the well known brands of PAGID and COSID in Europe and COBREQ in South America.

The acquisition further strengthens TMD Friction's position as a European and worldwide leader in automotive friction. On a consolidated basis the combined businesses will have revenues of approximately €650 million and will manufacture from 16 plants across 10 countries with a combined total workforce of over 5,500 employees.

Mark Dunfoy, Director of HSBC Private Equity, commented: "The automotive brake components industry is consolidating rapidly and TMD Friction's acquisition of RÜTGERS AG's automotive friction business is a further example of this ongoing process. This acquisition provides a very good strategic fit for TMD Friction, consolidating its leading position in its main European markets, whilst at the same time establishing an important presence in key emerging markets in Brazil and Mexico, and consolidating TMD Friction's position in China. The acquisition also provides TMD Friction with access to complementary technologies."

Dr Erich Bauer, Chief Executive Officer of TMD Friction said: "This acquisition is a further step in our strategy to offer a global presence to our vehicle and brake manufacturer customers. Based on our leading position in Europe, we have now achieved the critical mass to support an expansion programme in North and South America and the Far East, supported by an innovative R&D global function. In Europe we will strengthen our aftermarket position, as we will have access to additional production capacities, thus providing an improved availability and range to our customers.
We strongly believe that the larger group will bring additional opportunities for all employees, based on an extended global reach and higher market shares. We are confident we can develop the group to the benefit of all our employees."