Pursuing Continental
July 15, 2008
Schaeffler offered 69.37 euros ($102) per share, a statement said, adding that it already owned 2.97 percent of the shares in Continental; the world's fifth largest auto parts groups, excluding tires. But Schaeffler said it was not necessarily seeking a majority stake in the giant auto parts company.
The deal would value Continental at 11.2- billion-euro ($18 billion) and if successful, would create a merged company with a combined turnover of about 33 billion dollars.
Schaeffler "is seeking to acquire a strategic shareholding of more than 30 percent in Continental but not necessarily a majority stake," it said.
Schaeffler said it would support Continental's business strategy and that Continental would continue to operate as a stand-alone, listed company.
"No jobs would be lost in conjunction with the transaction," it said, adding that financing "for the purchase of all shares has been secured in the full amount."
The two groups were "ideal complements to one another" because Schaeffler was strong in powertrain components while Continental focused on electronic and software systems for engines, chassis and interiors, it said.
Last year, Schaeffler posted sales of 8.9 billion euros, almost three times less than Continental's 2008 target of 26.4 billion.
Under German regulations, any company acquiring 30 percent in another must launch a general offer for all the outstanding shares, allowing other shareholders the opportunity to cash out if they so wish.
Continental may put up a fight
However, signs that Continental might opt to defend itself against the 69.37-euro-share cash bid could turn the Schaeffler move into one of those rare business events in Germany - a hostile corporate takeover.
Such a situation would bring an unlikely business woman to the fore.
The takeover plan could well bring Maria-Elisabeth Schaeffler, the 66-year-old Prague-born billionairess who is helping chart the audacious acquisition of Continental; a company which is nearly three times as big as her own, into the limelight.
With her carefully coiffed blonde hair and elegant dress, Schaeffler cuts a glamorous figure in the staid German world of car parts and ball-bearings and brings with her an added sense of legacy.
The Schaeffler group's move to take control of Hanover-based Continental is part of on-going German business story.
This concerns the major role played by the nation's largely family-run small-to-medium sized companies (the so-called Mittelstand) in Germany's post-World War II emergence as Europe's biggest economy.
After inheriting the company following the death of her husband 12 years ago, Schaeffler now shares ownership with her son, Georg, a US- based lawyer.
Forbes magazine estimates their combined wealth at 5.4 billion euros, making them the seventh richest Germans.
Four years ago, a German economics magazine nominated Maria-Elisabeth as family businesswomen of the year.
But Schaeffler, who grew up in Vienna and abandoned her medical studies in 1963 to marry the entrepreneur Georg Schaeffler, tends to keep very much in the background of the company her husband helped found in 1946 in the small Bavarian town of Herzogenaurach with his brother more than 60 years ago.
Instead, she prefers to leave the limelight to chief executive Juergen Geissinger, who presided over Schaeffler's successful takeover of rival FAG Kugelfischer seven years ago.
Small town, big ambition
The group's latest move also sheds light again on the prominent position that Herzogenaurach occupies on Germany's business map. With a population of just 23,000, the town is also home to leading sports goods-to-fashion groups Puma and Adidas. The Schaeffler group is the town's biggest employer.
The Schaeffler group is not listed on the stock exchange and like many other members of Germany's Mittelstand was not widely known before it revealed its plan to take control of Continental.
Schaeffler's combined workforce of about 66,000 is less than half that of Continental's 150,000 employees, with the Schaeffler bid sending ripples across the political establishment in the state of Lower Saxony where the tire maker is based.
A slump in the car industry and an 11-billion euro acquisition last year has helped to drive down Continental's shares, leaving the group exposed to possible takeover attacks. Continental's shares have halved in value over the last 12 months.
However, Continental's confirmation that it had held talks with Schaeffler sent the tire maker's stock hurtling back up.