Is Schaeffler Seeking Complete Control of Conti?

Speculation is mounting that Schaeffler Group executives are positioning themselves for a complete takeover of Continental AG. Following the ball-bearing maker’s successful bid for just under half the company, Schaeffler Group, is now responsible for 11 billion euros ($14.3 billion) of debt relating to the deal. However, the increasing negative global economic climate, especially with relation to the automotive supply business has led some observers to characterise Schaeffler as being backed into a corner. According to Bloomberg, “Schaeffler has one way out: gaining full control of Europe’s second-largest car-parts maker.”

Continental will now hold an emergency supervisory board meeting on 24 January (tomorrow), a gathering that has been arranged in the wake of Schaeffler’s reported demands for the resignation of Continental supervisory board chairman Hubertus von Gruenberg. According to the Financial Times this threat was delivered alongside an ultimatum – either Continental forces out von Gruenberg and gives Schaeffler representatives four seats on the board or the ball bearing member will push for the replacement of all 20 investor representatives on the 20-member board.

The Bloomberg report quoted Robert Heym, a Munich-based automotive expert with law firm Reed Smith as saying: “An independent Continental board and management are not in Schaeffler’s interest…Schaeffler needs control, and they would have enough shares to replace the board at the next shareholders meeting.”

However, it is not clear whether or not von Gruenberg will become a kind of scapegoat sacrificed to appease the corporate suitors. If the supervisory board chairman fails to resign, Schaeffler could call for an extraordinary investor meeting in advance of the next shareholder meeting on 23 April.

Dr Hippe leaves Continental for ThyssenKrup

Meanwhile Alan Hippe, Continental AG’s chief financial officer will reportedly leave the company to become CFO of ThyssenKrupp. According to reports in Germany’s manager magazine and the Financial Times, Hippe will announce his resignation the emergency board meeting. Hippe’s departure comes just six months former CEO Manfred Wennemer resigned.

FT explained that Dr Alan Hippe will join Thyssen-Krupp in the role of joint CFO with Ulrich Middelmann who is expected to retire in January 2010.