Conti Tells Shareholders to Reject Schaeffler Offer

Continental AG’s supervisory and executive boards have recommended that shareholders decline Schaeffler KG’s 11.3 billion euro takeover offer. However, the executive board will continue to negotiate in the short-term, with the full backing of the supervisory board. “Specific progress” is said to have been made in the ongoing talks. The executive board said it will continue to evaluate “all options of action.”

In response the Schaeffler Group welcomed Continental AG’s decision to continue the negotiations about an agreement without delay, adding that Schaeffler is very confident that the negotiations will lead to a positive result. “In the interest of both companies, we are also aiming to reach an agreement as rapidly as possible,” Dr. Juergen M. Geissinger, president and CEO of the Schaeffler Group said in a statement.

Earlier Frankfurter Allgemeine Zeitung reported that the Schaeffler Group was ready to raise its offer to 75 euros a share. Could this be the “specific progress” Continental mentioned?

Continental’s press release explained that Schaeffler’s 70.12 euro cash per share offer is “inadequate from a financial point of view.” In case of a takeover, tax disadvantages and increased refinancing costs are likely to arise. From Continental’s point of view, the economic advantages presented by a merger with the Schaeffler Group are “limited.” The statement said investment banks Goldman Sachs and JP Morgan agreed with the two boards’ point of view. Additional news reports suggested Lehman Brothers has been added to the now nine advising banks supporting Continental’s defence plans?