Continental to Buy ITT Industries’ Brake, Chassis Business

Continental, the world’s fourth-largest tire maker, said Monday it was expanding its business by buying the brake and chassis business of ITT Industries Inc. for $1.93 billion.

Germany’s Continental, whose brands include Uniroyal and General tires, said the purchase would enable it to participate in a trend toward producing entire car components, including so-called smart tire systems with electronic stability programs to stabilize a car during tight turns.

Formed in 1995 when the old ITT conglomerate was split into three companies, White Plains, N.Y.-based ITT Industries has been paring its portfolio to focus on core activities. Earlier this year it sold its automotive electronics unit for about $1.7 billion to French component supplier Valeo.

ITT’s brake and chassis business, which is based in Frankfurt, as is Continental, generates about $2.14 billion in sales a year and is a leader in disc brakes and anti-lock braking systems.

The company said it expected to use the proceeds from the sales to Continental--which is put at $2.6 billion after taxes--to buy back up to about $1 billion of its shares by the end of 1999.

The company said the balance of the proceeds from the sales will be used to pay down debt and to finance external growth opportunities within ITT Industries’ core businesses--fluid technology, defense, electrical connectors and automotive components.

The deal is subject to regulatory approval.

ITT Industries’ stock fell 25 cents to close at $32.94 on the New York Stock Exchange.