Having attained the approval of antitrust authorities, Continental has completed the acquisition of all shares in the Finnish spikes manufacturer TIKKA Spikes Oy, along with its Russian subsidiary OOO TIKKA, based in St. Petersburg. Financial details of the takeover have yet to be released.
With its takeover offer acceptance period now over, and Schaeffler Group now in control of 48.32 per cent of Continental AG, the ball bearing maker is already talking of partnership pitches to vehicle manufacturers.
“This result is a great success for us. We have reached our target of gaining a strategic shareholding of more than 30 per cent in Continental AG. This means that talks can begin with Continental as soon as possible about cooperation projects to realize market opportunities for both companies by consolidating expertise in development and innovation.
The planned reverse takeover transaction between Amtel-Vredestein and Sibur Holding, which would see the former company purchase all issued and outstanding shares Sibur Russian Tyres before the latter purchases the resultant enlarged company, has been approved during Amtel-Vredestein’s Extraordinary General Meeting of Shareholders.
Specifically, Amtel-Vredestein reports the following approved resolutions:
On August 26 Continental AG released the following statement:
On August 13, 2008, the Executive Board and Supervisory Board of Continental Aktiengesellschaft published their joint statement in accordance with Section 27 (1) sentence no 1 of the WpÜG (German Securities Acquisition and Takeover Act) regarding the voluntary public takeover offer of Schaeffler KG, Herzogenaurach, and amended the statement on August 20, 2008. On August 21, 2008, Continental entered into an investment agreement with Schaeffler KG, Mrs. Maria-Elisabeth Schaeffler and Mr. Georg F.W. Schaeffler. In this investment agreement, Schaeffler undertook, among other things, to limit its holding in Continental to a maximum of 49.99 per cent of the voting capital stock, unless the Executive Board of Continental agrees to a larger holding. Continental released the main content of the investment agreement in its ad-hoc announcement dated August 21, 2008.
After more than a month of talks and controversy, on August 21 Continental AG announced it has entered into what it calls a ‘far reaching investment agreement’ with Schaeffler KG, Mrs. Maria-Elisabeth Schaeffler and Mr. Georg F.W. Schaeffler. The agreed upon deal sees Schaeffler increase its offer to 75 euros per Conti share, however this “new chapter in its Corporate history”, to quote Continental, will be one without CEO Manfred Wennemer; Mr. Wennemer has asked the Conti supervisory board to release him from his responsibilities by August 31, 2008. The supervisory board has agreed to this request, noting great respect for Wennemer’s achievements. His successor will be appointed in the immediate future.
Hubertus von Gruenberg, Continental AG’s supervisory board chairman, has been excluded from negotiations with Schaeffler in spite of his approval of the potential takeover. According to the Financial Times Deutschland report, adviser Perella Weinberg Partners had suggested von Gruenberg and Conti’s personnel representative, Werner Bischoff, get involved to try and help break the deadlock in talks between Schaeffler and Conti CEO Manfred Wennemer.
The month-long hostile takeover battle between Continental AG and Schaeffler Group could be over this weekend…or not. According to news reports, Conti and Schaeffler are negotiating a “friendly agreement.” Various sources are speculating that this means Jurgen Geissinger, Schaeffler’s chief executive, has tabled a new offer of 75 euros per share. However, both the Financial Times and Euroweek point out that it is not over till its over and if Continental shareholders refuse the offer Schaeffler will have to either convert all the swaps it holds in Conti into shares or terminate them all. 12 days of Schaeffler’s offer period remain.
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.”
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?
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.
Continental AG’s management is struggling to find a majority willing to back its anti-takeover strategy on the group’s supervisory board. Frankfurter Allgemeine Zeitung confirmed earlier reports that supervisory board head Hubertus von Gruenberg sees a merger with Schaeffler as beneficial and therefore is skeptical about getting involved in a drawn out battle with the takeover aggressor. Hans-Olaf Henkel and Michael Frenzel, CEO of TUI AG. are also believed to back negotiations with Schaeffler, the paper added. However, supervisory board members Diethard Breipohl and Fred Steingraber are said to be sticking to their guns with a view to eventually forcing Schaeffler to increase its bid, Frankfurter Allgemeine Zeitung reported.
As report suggest investment banks have walk away from rescuing Continental AG from the Schaeffler Group’s hostile takeover, Reuters that the ball bearing maker has successfully arranged a 16.1 billion euro loan. Schaeffler is reportedly “very satisfied” with a bank meeting on the subject of raising the enormous loan. The sources said about 20 banks participated in the meeting.
At the 62nd IAA Commercial Vehicles in Hanover, Germany, held between September 23 and October 2, Continental intends to present a wide range of products and services for commercial vehicle manufacturers, fleet operators and special-purpose vehicle manufacturers. The company reports it will be exhibiting both indoors, at booth B05 in hall 17, and outdoors (G 63). Last year’s takeover of Siemens VDO Automotive has further expanded the company’s product spectrum, specifically in the area of commercial and special-purpose vehicles. All in all, five of Continental’s six divisions will have new products and services on view at the IAA Commercial Vehicles 2008, not least the tyre products division.
Schaeffler Group has warned Continental not to employ a large capital increase as a way of warding off its 11.3 billion euro unsolicited takeover bid. Schaeffler’s move meant dropping a condition that would end the bid if Continental prepared to raise its share capital during the offer period, which is due to end on 27 August. “Schaeffler group thus counters market speculation that its offer to Continental shareholders could be prevented by such…measures,” an official statement explained.
In July those at Continental AG learnt what it feels like to be victims of their own success. Only a year after it multiplied group annual sales to over 25 billion euros through the acquisition of Siemens VDO, it appears Continental has made itself so attractive to bearing maker Schaeffler Group that the privately held company (which is about a third of Conti’s size) stalked its way to controlling roughly 36 per cent of the tyre and automotive supplier (see August's Tyres & Accessories for full coverage). On the one hand this is a compliment to the leadership that has brought Continental to where it is today. But on the other hand it comes as stark warning that stock markets can be fickle and public ownership can leave you at the mercy of shareholders.
Furthermore, it could be argued that leveraging itself and courting the stockmarkets in order to achieve its ambitious goals has been a double-edged sword – and in July Conti’s management felt the sting of its own blade. In the last few years Continental has been on something of corporate shopping trip. The biggest single purchase by some way was the acquisition of Siemens, announced in July 2007. This move was perhaps the biggest step towards Conti’s vision of a “new Continental,” which would produce cutting edge tyre to brake automotive technology.
Continental AG’s supervisory board has arranged for a supervisory board meeting to take place on 13 August, online news sources are reporting. Schaeffler Group’s 11.3 billion euro bid will be top of the agenda, sources told the dpa news agency. The news follows reports that Continental’s management is working to drum up allies including private-equity firms to fend off Schaeffler’s unsolicited takeover bid. It is not clear who the company’s potential white knight(s) may be, but the Wall Street Journal reported that Continental has held “preliminary discussions” with firms including US private-equity firm TPG.
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.”
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