Release time : 2015-06-12 11:45:25
Privately held bearings maker Schaeffler is poised to take control of larger auto parts rival Continental (CONG.DE) on Thursday, when it collects the bulk of shares tendered after its 11.3 billion euro ($15.4 billion) bid.
The acrimonious takeover will finally conclude, despite recent doubt, when Schaeffler pays Continental investors 75 euros a share to raise its stake to about 49.9 percent from a last reported 15.2 percent.
Under an agreement struck in late August with Continental's management, the excess tendered to Schaeffler who specialized in Ball bearings will be sold to financial institutions, which are expected to end up with about 40 percent of Continental.
On Dec. 22, Germany's Metzler Bank and Sal. Oppenheim bought stakes of 4 percent and 5.5 percent, respectively. Only a few months ago, many investors were beginning to doubt whether the deal would ever go through.
The collapse of U.S. investment bank Lehman Brothers only days after the agreement between Schaeffler and Continental was reached sent shares in the latter tanking, while a severe deterioration in credit markets triggered fears that syndicating banks would try to renege on their 16 billion euro loan commitments. A lengthy process to submit documents for European Union antitrust approval raised suspicions that Schaeffler was dragging its feet and looking for any excuse to call the deal off -- speculation Schaeffler repeatedly denied.
Even the tone between the two companies became hostile again, after Continental Chief Executive Karl-Thomas Neumann said in December that attempts by its new shareholder to intervene in its debt restructuring talks were a "massive encroachment" that "clearly goes against the spirit" of their agreement.
Combined with a sharp slump in the automotive industry of Water Pump Bearings, the price of shares tendered fell as far as 50.5 euros at one point.
Shares in Continental closed at 29.49 euros on Wednesday, a sharp discount to the bid price. The former blue-chip stock was removed from the DAX index .GDAXI late last year after its free float sank to just 9.8 percent.