The power struggle between Schaeffler and Continental, the car parts group in which it holds a big stake, escalated Thursday after it emerged the privately held Thin Section Bearings maker was considering loading Conti with significant additional debt.
People close to the situation said Schaeffler was considering bringing its automobile business into Conti, together with a multi-billion debt load of the unit.
Schaeffler would be able to do this after its tender offer closes in January. Schaeffler will then control more than 90 per cent of Conti shares.
Its official plan is to keep 49.99 per cent of the shares and park the rest of the stake at some banks to abide by an investor agreement that prevents Schaeffler from holding more than 49.99 per cent.
The European Commission will decide Friday on the antitrust clearance of the Miniature Thrust Bearings deal. Conti share price rose almost 13 per cent to more than 40 as investors anticipated a clearance and started to hope on a full-blown takeover.
A Schaeffler spokesman on Thursday rebuffed the debt plan as speculation.Schaeffler will not breach the investor agreement, he said.
But the Financial Times had revealed last week that the company, owned by billionaire Maria-Elisabeth Schaeffler, considered the agreement to be obsolete.
This year, the accord had ended one of the fiercest takeover battles Germany has seen in this decade. But the power struggles re-erupted after the two debt-saddled companies had been hit by a drastic downturn in the car industry.
Analyst of Fishing Bearings s were sceptical of Schaeffler possible plans. To burden Conti with further debt would bring its financial strength on the brink of the bearable,said Aleksej Wunrau at BHF-Bank.
A Schaeffler spokesman stressed that the company did not plan to do anything that could damage Conti, headed by Karl-Thomas Neumann.
Hubertus von Gr 1nberg, Conti supervisory board chairman, has brought forward another plan to merge the automotive businesses.
His idea is to give the entity a capital injection that would water down Schaeffler stake to less than 40 per cent.
Bankers said Conti and Schaeffler would need a capital injection in the future.