Kontron Acquires 70% Stake in Czech-based Automation Software and System Solutions Provider, Merz Sro.

Eching Germany, July 18, 2001 - Kontron Embedded Computers, a leading supplier of embedded computers today announced the signing of a definitive agreement to acquire a majority stake in Czech-based software company Merz spol. S.r.o. Liberec.

Through a share exchange, Kontron will acquire 70 percent of the shares of Merz. The deal is valued at 1.8 million DM ($800,000 US) and is set to close by August 15, 2001. Merz, which currently employs 35 people, has been active in the Czech Republic for almost 10 years and is projecting 2001 revenues of approximately 3 million DM ($1.3 Million US), with an EBIT of approximately 20 percent.

Merz designs standards-based automation software for various applications primarily for the public utilities, such as the hydro electric, water and energy providers, as well as for the paper industry. By integrating Merzs software with Kontrons embedded computer components, Kontron is better positioned to deliver complete, tailor-made embedded computer system solutions to customers in these business sectors. The expanded product offering will be supported by Kontrons existing worldwide marketing, sales and distribution channel.

"This latest acquisition underscores Kontrons continued commitment in evolving from being a component supplier to a system provider and in the process elevating our customer relationships" said Hannes Niederhauser, CEO of Kontron. "In fact, the Merz acquisition adds 30 more highly qualified senior-level development engineers who will be instrumental in helping Kontron deliver new added value solutions to our customers."

About Kontron Embedded Computers
Kontron Embedded Computers is one of the largest manufacturers of embedded computing solutions. Kontron supplies leading OEMs, system integrators and application providers in the fields of communications, automation and mobile computers. The company helps its customers to considerably reduce their time-to-market and to gain a competitive advantage with products including high-performance open computer platforms and systems, single-board computers, man-machine interfaces and portable computers. Kontron employs more than 1000 people worldwide and has manufacturing facilities in Europe, North America and Asia Pacific. Kontron is listed on the German Neuer Markt stock exchange under the symbol "KBC."

Investor Relations:
Gaby Moldan
Kontron Embedded Computers AG
Oskar-von-Miller-Str. 1,
85386 Eching
Tel: +49 8165/77643
Fax 08165/77219
Email: gaby.moldan@kontron.com