DETROIT - The new joint venture between Breed Technologies Inc. and Siemens Automotive could lead to a merger within a few years.
If the venture goes well, two sources say Siemens might launch a friendly takeover.
'If you look at the history of Siemens, there are indications this would be the next logical step,' one source said. 'This would not happen in the next few months, but possibly in the next few years.'
Siemens announced its joint venture with safety systems manufacturer Breed last October. Under the agreement, Siemens will design sensors and other electronics for 'smart' airbag systems, while Breed will produce airbags, inflators and seatbelts.
As part of the deal, Siemens acquired a 10 percent share of Breed's stock, plus two seats on Breed's board of directors.
Siemens also owns a controlling share of the newly named BSRS joint venture, although day-to-day decisions will be made on a 50-50 basis.
Breed and Siemens held a joint press conference at the SAE International Congress and Exposition in Detroit last month. They downplayed rumors of an eventual takeover - but did not rule them out.
'At this moment, we have no desire to buy a bigger share of Breed,' said Franz Wressnigg, chairman of Siemens Automotive. 'Why should we buy Breed if we can work together?'
Breed and Siemens both face pressure to design entire safety systems.
Until recently, Breed was known as a specialty supplier of airbag inflators. In the past few years, Breed has made a series of acquisitions to transform itself into a global supplier of safety systems.
Meanwhile, Siemens - long known as a specialty supplier of electronics - has been trying to broaden its product lineup. Siemens began to feel under pressure last year, when its joint venture with TRW Inc. to produce safety systems was undermined by an alliance between TRW and Magna International Inc.
'We got a little bit nervous when Magna and TRW announced their alliance,' Wressnigg said. 'That speeded up the whole process.'