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Professor: Schaeffler’s Creeping Takeover Illegal

Prof. Mathias Habersack, of Eberhard Karls University in Tuebingen, Germany, has spoke out against the way in which Schaeffler Group purchased share swaps in the build-up to its creeping takeover bid for Continental AG. In the course of defending itself from Schaeffler’s unsolicited 11.3 billion euro bid, Continental’s management cried foul and called in Bafin the German federal financial regulator. The officials cleared the takeover bid itself, but are reportedly still investigating the legality of the so-called creeping part of the takeover. The fact that Prof Habersack, himself a member of the board of trustees of the German Banking Law Association, has leant his support to Conti’s case, could suggest the legal angle will continue to be a key role in the company’s defence plan.

In a report commissioned by Continental AG Prof Habersack concluded that Schaeffler’s methods demonstrate “a clear infringement of the reporting and notification provisions of the German Securities Trading Act and Securities Acquisition and Takeover Act.”

1st August 2008/by Tyrepress Editors

Phillips Carbon Black Considering Greenfield Facility

India’s largest carbon black producer, Phillips Carbon Black Ltd, plans to establish a fourth facility and expand capacity at two existing plants, those at Baroda and Durgapur. Following the company’s recent AGM, company chairman Sanjeev Goenka indicated another facility, or alternatively a further acquisition of capacity, may be necessary now that existing capacity at the three factories in fully utilised. This fourth greenfield plant, should the company choose to take this option, may be located either within India or overseas.

29th July 2008/by Tyrepress Editors

Conti’s Rearguard Action Takes Shape

As an increasing number of voices speak out in favour of the proposed Conti/Schaeffler merger, Continental AG executives have called in a number of high profile investment banks to advise it on how best to defend its position. The most recent addition to this team is Deutsche Bank, which joins Goldman Sachs and JPMorgan as advisors.

The strategy behind the defensive manoeuvre appears to have two key objectives: to wrest complete control out of the clutches of the rapidly advancing Schaeffler; and to raise the suitor’s bid. Germany’s Handelsblatt reported that Conti chief executive, Manfred Wennemer told board members 89.74 euros per share (roughly 30% higher than the Schaeffler’s current 70.12 euros per share bid) is a ‘fair market price,’ for the tyre and automotive supplier. Other sources quote board members as saying 90 to 100 euros a share would be better. Could this be the target level the defence team will be seeking to achieve? And if so, how can Conti defend its position?

29th July 2008/by Tyrepress Editors

JK Tyre Quarter Profits Hit by Increased Costs

Third quarter profits for JK Tyre & Industries Ltd were dented by rising material costs. Although sales in the three months to June 30,2008 were 17.7 per cent up on the previous year, between April and June the company recorded a net profit of Rs 202.4 million (£2.37 million), an increase of just 0.25 per cent on the previous year’s third quarter. Net sales for the quarter were Rs 8.49 billion (£99.57 million), as opposed to 7.22 billion (£84.68 million) a year earlier.

25th July 2008/by Tyrepress Editors

Pirelli Expresses ‘No Interest’ in Conti Acquisition

Pirelli & C SpA has distanced itself from speculation over the potential sale of Continental AG or its tyre division. The Italian company, who along with Bridgestone and Yokohama has been named as a possible contender for Conti, denies any such acquisition is planned or desired. On July 17 a Pirelli spokesperson stated “we have had no direct or indirect contact and have no interest in either Continental or its tyre division.”

21st July 2008/by Tyrepress Editors

Schaeffler Likely to Take Control of Continental AG in 2010

Schaeffler Group is likely to wait until 2010 before it takes full control of Continental AG, German radio station NDR1 reported on 16 July. The report, which didn’t cite any sources, suggests that Schaeffler will wait until the lion’s share of the loan arrangement Conti racked up to finance the Siemens VDO acquisition expires. According to the report, this would also mean Schaeffler would have to re-negotiate conditions before the loans expire, and in the current conditions would not get such a good deal.

The German radio report was aired the same day that financial analysts at MorganStanley published an investor note suggesting “a takeover bid meant to fail could push the share price higher for the next 30 days.” The MorganStanley analysts point out that, in their opinion, a full takeover of Conti does not appear “financially feasible.” However, the takeover bid should clearly add strong support to the share price in the short term, the analysts conclude.

17th July 2008/by Tyrepress Editors

Self-Sustaining Research & Development in Conti Matador Machinery

Since Continental’s acquisition of 51 per cent ownership of Matador in early November of last year, the German giant has merged its own Mould and Machine Factory with the Slovakia-based Matador Machinery division. The resulting company is now a world leader in designing and producing machinery and equipment for the whole tire industry, while Conti upped their stake in Continental Matador to 66 per cent on July 1 this year (as reported on tyrepress.com).

9th July 2008/by Tyrepress Editors

Pirelli Complete Speed Acquisition

Financial news sources report that Pirelli have acquired the 19.19 per cent of Speed SpA necessary to complete the full purchase of the company.

Speed owns a 38.9 per cent stake in Pirelli – the only stake not already owned by the Italian manufacturer itself. The acquisition of Speed for the grand sum of 835.5 million euros – as announced back in March – therefore completes the repurchase of shares in Pirelli Tyre.

9th July 2008/by Tyrepress Editors

Conti Increases Stake in Continental Matador

Continental has increased its share in Continental Matador Rubber following a July 1 agreement to transfer an additional 15 per cent of Continental Matador shares. Following the transaction the Continental Group holds 66 per cent of shares in Continental Matador Rubber.

3rd July 2008/by Tyrepress Editors

Amtel-Vredestein, Sibur Holding Deal will Create ‘Top 10 Tyre Producer’

Amtel-Vredestein has reached an agreement with Sibur Holding that will see it acquire Sibur Russian Tyres in exchange for 159.3 million new Amtel-Vredestein shares. Amtel-Vredestein will also carry out a $150 million share placement, and Sibur Holding has already agreed to acquire $50 million worth of these shares. As a result, Sibur Holding will own 70 per cent of the new expanded tyre operation. This deal, which values Sibur Russian Tyres at approximately US$318.6 million, promises to create “one of the leading diversified tyre producers in Europe and one of the top 10 tyre producers worldwide,” states Amtel-Vredestein.

The acquisition will give Amtel-Vredestein access to a $40 million line of funding from Sibur Russian Tyres. Media reports earlier in the year suggest Amtel needs roughly $20 million a month to keep raw materials flowing into the production process during the transition. As a result, the deal is expected to be completed in the second half of 2008.

Following the initial acquisition of Sibur Russian Tyres, the terms of the agreement call for Amtel-Vredestein to conduct a $150 million private share placement at a subscription price of not less than $1.89 per share. Sibur Holding has already agreed to purchase shares to the value of $50 million. Following a successful completion of this share issue, Sibur Holding will own 70 per cent of the new, larger tyre company and no less than 60.5 per cent of Amtel-Vredestein’s enlarged share capital as a result of the acquisition and placement. Sibur Russian Tyres chief executive Vadim Gurinov will head Amtel-Vredestein following the transaction.

Furthermore, Sibur Russian Tyres has agreed to provide Amtel-Vredestein with an interim funding facility of $40 million, subject to the agreement of the second company’s shareholders. The interim funding will be provided in two tranches; $20 million will be immediately available to Amtel-Vredestein upon signing a definitive agreement, and the balance available upon Amtel-Vredestein’s shareholders passing the required resolutions at the EGM. The amount raised through the interim funding is intended to enable Amtel-Vredestein to meet its liquidity requirements until completion of the acquisition and placement.

Amtel-Vredestein notes soberly that, in light of its difficult financial position, the transactions with Sibur Holding are “considered essential to the continued viability of Amtel-Vredestein as a going concern and, without the transactions, Amtel-Vredestein’s debt restructuring cannot succeed.”

“This is a significant achievement for Amtel-Vredestein and Sibur Russian Tyres and for their shareholders as well as all stakeholders,” commented Petr Zolotarev, CEO and chairman of the Amtel-Vredestein Executive Board. “The combination of the two businesses as well as the placement will provide the enlarged group with a stronger balance sheet and essential funding to continue operating as one of the leading global tyre manufacturers, creating at the same time one of the leading companies in the Russian market. Going forward, the enlarged group will benefit from greater economies of scale, enabling it to compete more efficiently. ”

Alexander Dyukov, chairman of the Boards of Sibur Holding and Sibur Russian Tyres, commented that “The transaction will create one of the top 10 tyre producers worldwide, and is in line with Sibur Holding’s strategy to increase the value of its tyre business.” Sibur Russian Tyres CEO Vadim Gurinov added “the Russian tyre market has a very high growth rate and the enlarged group will be very well positioned to benefit from the growth, finding itself in a win-win situation. In addition to leading positions in the truck and off-the-road tyre segments, the group gains the same positions in the passenger and light trucks tyre segments and becomes an undisputable market leader in Russia and the largest tyre manufacturer in Eastern Europe. Moreover, by this combination, we are able to reach additional synergies through acquiring an up-to-date research base, high-quality tyre brands and a wide European distribution network. From my point of view, this business combination provides us with great prospects and development opportunities.”

Russia’s economy is growing strongly, comments Amtel-Vredestein, adding that the enlarged group will be better positioned to benefit from this and compete effectively with foreign competitors. Furthermore, it states, “the parties are confident there is significant scope for realising synergies by combining the operations of the two companies in areas of manufacturing, research and development, administrative cost savings and a rationalisation of the capital investment programme.”

30th June 2008/by Tyrepress Editors

Conti Private Equity Acquisition Unlikely, Say DB Analysts

Shares in Continental AG have apparently declined again after rising by more than seven per cent on June 25, the result, say traders, of renewed market talk of interest in a private equity bid. The German financial newspaper named Boersen-Zeitung, Banco Santander SA, ING Groep NV and Deutsche Bank AG as the favoured contenders for bidding. The company has, however, declined to offer any information on the issue. “We don’t comment on speculation,” said Conti spokesman Hannes Boekhoff.

27th June 2008/by Tyrepress Editors

JK Tyre Acquires Mexican Firm Tornel

Indian tyre firm JK Tyre & Industries has completed the purchase of a 100 per cent stake in Mexican manufacturer Tornel. The company reportedly spent 2.7 billion Rupees in bringing Tornel under its control. The move adds a 290 tonne production capacity in Mexico to JK’s domestic capacity of 650 tonnes.

In a statement from JK Tyre, the reasons cited behind the acquisition included the desire to increase the global impact of the firm, while the location of Mexico was particularly important in opening access to the North American Free Trade Agreement and the developing territories in Central and South America.

24th June 2008/by Tyrepress Editors

American Tire Corporation to Hold Goodyear Acquisition Lectures

It appears American Tire Corporation (ATC) still holds a strong interest in acquiring the Goodyear OTR tyre facility in Kansas, USA. To follow on from the letter sent to Goodyear regarding this on April 21, ATC is organising a number of information events and has invited a number of senior Goodyear exports to speak at these. These speeches are due to be held at the ATC facility in California on June 23 and “thereafter”, a press release from ATC states.

23rd June 2008/by Tyrepress Editors

Bridgestone Launch Bandag Chain to Boost Japanese Retreads

The Bridgestone Corporation has announced that it is to promote its recycled tyre business through Bandag, a new retail chain based on their retreading business acquisition of last year: the US firm Bandag Tire Solutions. The chain will look to employ the technology of Bandag Tire Solutions to retread around 10,000 tyres every year. Bridgestone plan to open its first new Bandag depot by the end of the year, and to spread the presence of the chain to 20 over the next three to four years. Each one will be the subject of a 100 million yen investment.

20th June 2008/by Tyrepress Editors

Unimax Deal Off, Tirecraft Back into Receivership

Tirecraft Group was placed in back into receivership after Pneus Unimax pulled its offer to buy the distributor and franchisor, which was supposed to close on May 30. News reports indicate that two investment companies – Omni Group of Companies and Stern Group – are in the process of bidding to take over the Sherwood Park, Alberta-based Tirecraft. Their bids were due on June 15, according to the Edmonton Court of Queen’s Bench.

CIT Business Credit Canada Inc., Tirecraft’s largest creditor, put the firm back into receivership on June 10 after efforts to sell the company to any of the original bidders failed. Ernst and Young, the court appointed receiver, plans to operate the business day-to-day while it is in receivership, though miscommunication apparently caused some store managers to close their doors briefly last week. Last week, Ernst and Young fired Tirecraft president William Steeple.

18th June 2008/by Tyrepress Editors