Schaeffler Willing to Sell Up to Save Company

Schaeffler Group’s billionaire owners (Maria-Elisabeth and son Georg Schaeffler) are reportedly willing to sell a significant amount of the family owned company in order to avoid a break-up of the automotive supplier. Initial reports in Thomson’s Merger News suggested Schaeffler’s owners were prepared to sell up to 75 per cent of the group in order to hold onto an anchor investment and prevent a break-up of the company. However, six hours later, Forbes quoted Detlef Sieverdingbeck, the firm’s spokesman, as saying that there is “no bottom or top limit.”

The latest developments are being seen as a further concession designed to convince the German government to give Schaeffler emergency support. 24 hours earlier Schaeffler’s owners signed a co-determination pact with the union that represents workers at both the Schaeffler Group and Continental AG businesses. Analysts observed that Schaeffler’s willingness to sell its stock and cosy up to the unions shows just how precarious the situation is for both the Schaeffler Group and Continental AG.

During the day’s trading Forbes reported that Continental had plummeted 21 per cent to 10.11 euros, the stock’s sharpest fall for 16 years.

IG Metall chairman Berthold Huber commented: “The objective of IG Metall is to safeguard jobs at the Continental and Schaeffler locations. This agreement is the foundation to secure a good future for the Group. We request that all those involved also work intensively towards this future, in the same manner and on the basis of the agreed principles.”

The partners introduced a co-determination for Schaeffler, effective irrespective of the legal form the group of companies takes in the future. Both the unions and Schaeffler emphasized the economic validity of a merger between Continental and Schaeffler, but once again this focussed on Schaeffler’s mechanical expertise and Continental’s electronic technology. The fact the future of the tyre business was again omitted coupled with the owner’s desperate need for cash would seem to suggest that the sale of the rubber group is still a key option.

Schaeffler reports that that talks with potential investors, banks and the government remain ongoing. Meanwhile, Bavarian state head Horst Seehofer told Austrian daily Der Standard that state aid could be available for Schaeffler: “If thousands of jobs are in danger and there is a sustainable concept on the table, then the state can help.”