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WEG announces joint venture with CESTARI Industrial

WEG announces joint venture with CESTARI Industrial and enters power transmission business
Jaraguá do Sul (SC) - October 19, 2011 - WEG S.A. (Bovespa: WEGE3 / OTC: WEGZY) and CESTARI Industrial e Comercial S.A. ("CESTARI") announced today the signing of a memorandum of understanding for the constitution of a joint venture for the development, manufacturing and distribution of gearboxes and gear motors.

On closing the agreement between WEG and CESTARI, WEG will acquire 50% plus one share of the joint venture company based on CESTARI¿s assets related to the manufacturing of gearboxes and gear motors. It is estimated that these assets shall reach revenues of approximately R$ 70 million in 2011. CESTARI is a leading player in the Brazilian gearboxes and gear motors market and is headquartered in Monte Alto, State of São Paulo, with vertically integrated production capabilities that include iron, bronze and aluminum casting facilities and state of the art computerized machining centers.

The joint venture of WEG and CESTARI will combine the electric motors and industrial automation systems supplied by WEG with the gearboxes and gear motors developed by CESTARI, to be offered as integrated solutions. The market has been demanding power transmission solutions that integrate electric motors, frequency inverters and gearboxes, as there are clear benefits over operating performance and energy efficiency.

"We believe that this joint venture, given CESTARI¿s tradition and brand recognition, will significantly contribute to WEG¿s growth in the power transmission segment. Our strategy of offering complete solution gets stronger now, with a wide and flexible product line that includes both electrical and mechanical solutions" Said Mr. Siegfried Kreutzfeld, WEG Motores Managing Director.

According to Mr. Alcides Cestari Netto, CESTARI¿s Managing Director, "with this joint venture we will see a very strong player in power transmission, with market presence strengthened by WEG¿s distribution network, which shall amplify our sales channels."

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Statements about Future Expectations

Some statements contained herein may be projections or statements about future expectations. Such statements are subject to known and unknown risks that may cause such expectations not to come true or be substantially different from the expected. Those risks include, among others, changes in the future demand for the products of the company, changes in the factors that affect the domestic and international prices of the products, changes in the cost structures, changes in the markets, changes in the prices practiced by the competitors, exchange rate variations, changes in the political-economical scenario in Brazil and in emerging and international markets.

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