Release time : 2015-06-12 11:53:04
Schaeffler yesterday said it might sell a stake in Continental to another investor as the economic crisis stretches the family-owned company's ability to take over its far larger rival.
Schaeffler's owner, Maria-Elisabeth Schaeffler, yesterday said the financial crisis and the slump in the automotive industry were causing additional challenges for the ball bearings maker's plans to take over Continental.
"It cannot be ruled out that a long-term orientated investor could take a larger stake in Continental," Ms Schaeffler said at an automotive congress in Berlin.
Schaeffler made a ?12.1bn ($15.7bn) offer for Conti this summer, originally intending to buy only a large minority stake. However, the bid left Schaeffler with more than 90 per cent of the shares as a sudden demand slump in the automotive industry dashed shareholders' optimism about Conti's growth prospects.
Schaeffler has agreed with Conti's management not to buy more than half of Conti's shares over the next few years and it now has to find a solution for the superfluous 40 per cent stake.
It initially intended to keep the stake in a "warehouse facility" at two banks.
However, that would be expensive, as Schaeffler would still have to finance a loan covering the full 90 per cent of the shares. This would leave the company with high interest rate payments in times of falling profits.
A non-strategic investor might provide a solution for Schaeffler. Such an investor could hold the shares for a couple of years and then sell it back to the family-owned company. But a sale could prove difficult because Schaeffler paid ?75 for Conti's shares, which yesterday closed up 5 per cent at ?35.28.
Investment bankers said there had been aproaches to sovereign wealth funds over the stake.
A spokesman for Schaeffler refused to comment, and Ms Schaeffler did not mention any names of possible investors.
Ms Schaeffler said the Conti takeover was part of Schaeffler's long-term strategy. "With our combined knowhow, we want to contribute to building the car of the future," she said.
Ms Schaeffler said job cuts at the Bavarian company could be unavoidable as the industry is battered by some of the worst financial difficulties in recent decades.
"This crisis hits us as suppliers with the same force as [it hits] the carmakers," she said. Ms Schaeffler jointly owns Schaeffler with her son Georg Schaeffler.