Release time : 2015-06-12 11:32:35
Schaeffler on Wednesday paved the way for a friendly settlement of one of the fiercest takeover battles corporate Germany has seen in recent years after it said it was willing to increase its euro 11.3bn ($16.8bn) bid for rival Continental.
J??1rgen Geissinger, Schaeffler???s chief executive, sent Conti???s supervisory board a letter stating that the privately-held bearings maker would be willing to pay euro 75 per share instead of the euro 70.12 it is currently offering, according to people close to the board.
Conti???s board again rejected the offer. But it said that management would continue negotiations with Schaeffler with ???the goal of reaching a solution to the benefit of the company as soon as possible???.
Mr Geissinger welcomed this, saying that Schaeffler was very confident that the negotiations would lead to a positive outcome.
A complete takeover is not Schaeffler???s intention in the short-term, as it has said it would only aim to buy a ???controlling stake??? of more than 30 per cent of the shares.
If Schaeffler were to gain a majority, this would create a hugely indebted group at a time where the outlook for the car industry looks grim. Some investors therefore were puzzled about the pledge to increase the bid.
???They should get a considerable amount of the shares if they lift the offer,??? said a large institutional investor.
However, Schaeffler has plenty of room for manoeuvre. The company owns 8 per cent of Conti???s shares and has access to another 28 per cent via swap transactions with banks ??C which it could cancel if too many shares were tendered.
It could also sell shares to the market after the bid ends in two weeks time.
With Schaeffler???s concession both sides can save face.
Manfred Wennemer, Conti???s chief executive, can claim he managed to squeeze a 7 per cent premium on the initial bid for his shareholders. The total value of the bid would be lifted to euro 12.1bn.
Schaeffler, on the other hand, will have reached its aim to gain a controlling stake in Conti, which is three times bigger in terms of sales. In the long run it will be able to swallow Conti completely.
The move came after Conti had stepped up its fight against Schaeffler in the past few weeks, considering an array of defence tactics that have now been put on hold.
Werner Bischoff, Conti???s supervisory board vice-chairman and trade union representative, said that for business strategic reasons, it is ???not appropriate to pursue a pure defence policy??? in tackling the Schaeffler takeover offer.
Mr Geissinger and Mr Wennemer have held several talks in the last weeks.
People close to Conti say the main issue for further discussions is how long Schaeffler would be willing to guarantee Conti???s independence as a listed company based in Hanover.
Conti???s share price rose 2.19 per cent on Wednesday to close at euro 73.17.