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Siemens AG has signed a deal with Continental to sell its stake in Siemens VDO Automotive for €11.4 billion.

The deal, says Conti, puts Continental into the top five automotive suppliers in the world. The group will have a combined annual sales of around €25 billion.

Continental executive board chairman Manfred Wennemer said the deal was "a once-in-a-lifetime opportunity to forge a global frontrunner in the automotive supplier sector".

Siemens chairman and CEO Peter Löscher said that the deal was "an outstanding result". He said: "We have carefully evaluated all options for Siemens VDO and chose the best perspectives for the employees, customers and our investors."

Plans to float Siemens VDO as a separate business will now be abandoned.

Siemens announced earlier this year that its automotive business was no longer regarded as core, and that it would concentrate under a plan called Fitfor 2010 on three sectors: Energy and Environmental Care; Automation and Control/Industrial and Public Infrastructure; and Healthcare.

Siemens VDO had sales of around €10 billion in 2006 and employed 53,000 people in 130 locations worldwide.