Schaeffler Concludes Takeover of Continental AG

The Schaeffler Group has completed its planned takeover of Continental AG, paying 75 euros per share to the depositary banks of those who tendered their shares to Schaeffler. As a result of all the recent share trading, Schaeffler Group holds 49.90 per cent of the voting stock of Continental AG and is therefore the company’s largest shareholder. At the peak of the complicated transaction Schaeffler Group held up to 90 per cent of Conti stock, although Schaeffler has now transferred the additional shares tendered to financial institutions. The European Commission gave clearance for Schaeffler to go ahead with its plans to buy into Continental AG on 19 December 2008.

“The conclusion of the takeover clears the way for integrating the companies quickly and in a pragmatic manner. Against the backdrop of the financial crisis and the market changes in the automotive industry, both companies are facing great challenges and have no time to lose. Constructive cooperation and concentration on factual issues and business matters is all important now. This is also what our staff and customers expect from us”, explained Dr. Juergen M. Geissinger, Schaeffler Group president and CEO.

In the company’s completion statement Dr Geissinger again failed to define Continental AG’s highly profitable tyre and rubber businesses as “strengths.” While he did remark that the combined companies will bring together “Schaeffler’s strengths in mechanical, mechatronic and precision components for engines, transmissions and chassis and Continental’s strengths in electronics and software systems for engines, chassis and vehicle interiors” the fact that he did not mention tyres or rubber products means there are still question marks over the future of these parts of the business.

Following publication of Schaeffler’s statement Continental responding by upholding the key points of the investment it agreed with the ball bearing maker on 20 August 20 2008: “Schaeffler has restricted its holding in Continental AG to a stake of up to 49.99 per cent through August 2012. It has also undertaken to support the ongoing strategy and business policies of the Executive Board…and to not demand a sale of operation…In addition, it was agreed that there will be no changes to Continental AG’s form of incorporation, its corporate seat, headquarters or business units, its listing on the stock exchange, its dividend policy or an increase in its indebtedness against the wishes of Continental AG.” Continental’s statement sought to eschew speculation that the company would now be pressurised into selling its rubber business: “The agreement cannot be terminated by the parties before spring 2014.”

The completion of Schaefflers investment into Conti also signals the start of former German Chancellor Dr. Gerhard Schröder’s role as guarantor responsible for protecting the interests of Continental and its shareholders, employees and other stakeholders.