Release time : 2015-06-12 11:59:28
Schaeffler Group will raise its offer to 75 euros per share and will guarantee up to 522 million euros in compensation for any unfavorable effects due to a change of control
* Commitments made by Schaeffler will be contractually agreed
* Schaeffler will support Continental???s management board in continuing the company???s strategic direction
*???A constructive solution that is in the interest of both companies???
Herzogenaurach-based Schaeffler Group entered into an investor agreement on Wednesday with Hanover-based Continental AG. The accord paves the way for Schaeffler to acquire a strategic shareholding in Continental, and for both companies to collaborate in a constructive partnership. Gerhard Schroeder, the former German Chancellor, has been enlisted to ensure that the interests of all of Continental AG???s stakeholders will be protected. Following the settlement of the takeover offer, both contractual partners will begin to investigate opportunities for strategic collaborative opportunities between Schaeffler and Continental, particularly in the powertrain area, on the basis of an equal partnership between two extremely capable and independent companies.
???From the very beginning, we have sought a constructive agreement that would be in the interest of both companies, their employees, customers, and shareholders. In doing so, we are laying the groundwork to combine the strengths of two of Germany???s technological leaders; a combination that will deliver innovative solutions for the future challenges facing the automotive industry,??? said Dr. Juergen M. Geissinger, Schaeffler CEO.
The agreement, which has an unlimited term and can be terminated at the earliest in the spring of 2014, contains comprehensive provisions that safeguard the interests of Continental AG as well as its shareholders, employees, and customers. Schaeffler Group will raise its offer from 70.12 euros to 75 euros per Continental share.
This corresponds to an additional 800 million euros for shareholders as well as a 39 percent premium over the price at which Continental AG???s shares were trading immediately before Schaeffler???s intentions became public. The offer also represents a 20 percent premium over Continental???s average share price for the past month as well as an 8 percent premium over the 3-month average trading price prior to the announcement of Schaeffler???s plans. The shareholders can still accept the offer until September 16, 2008 at the latest, which marks the end of the additional acceptance period.
For the next four years, Schaeffler agrees to limit its investment in Continental AG to a minority stake of no more than 49.99 percent. Schaeffler will support the management board???s existing strategy and business policies, while maintaining Continental???s current market and brand identities. Schaeffler also agrees neither to demand the sale of any assets nor to insist on any other fundamental structural changes.
In addition, Schaeffler Group guarantees Continental AG up to 522 million euros in compensation, should a change of control cause negative effects for Continental???s existing financing agreements or lose tax credits as a result of Schaeffler???s investment.
Furthermore, in the event that it should decide to sell shares from its minority stake within the next four years, Schaeffler agreed to prefer a buyer designated by the guarantor, if applicable, assuming that such action is understood to be in the best interests of both Continental AG and Schaeffler Group.
Moreover, Schaeffler assures that it will not proceed against the wishes of Continental AG in undertaking any changes in regard to Continental???s legal form, the corporate place of business, the location of its headquarters and corporate divisions as well as its listing on the stock exchange, nor to change any of Continental???s policies in regard to dividends, nor to proceed to increase the company???s debt ratio.
In an effort to protect the interests of employees, Schaeffler will not undertake nor support, without consent of the management board of Continental, any measures that would lead to the following: changes to works council or collective bargaining agreements; abolishment of the employees??? right to codetermination. Furthermore, Schaeffler undertakes to respect the rights of the employees, works councils, and unions at Continental that exist in accordance with the applicable statutory provisions, undertakings, terms, and agreements.
Dr. Gerhard Schroeder, the former Chancellor of the Federal Republic of Germany, is authorized to act as guarantor to protect the interests of Continental AG, its shareholders, employees, and other stakeholders. Dr. Schroeder is further empowered to ensure that Schaeffler fulfills its obligations and to enforce these through both judicial and extrajudicial means. In this regard, he is entitled to request information from Schaeffler on its fulfillment of its obligations under the investor agreement.