SHANGHAI, Sept. 16 /Xinhua-PRNewswire/ -- On July 15, 2008, Schaeffler Group announced that it would seek to acquire a strategic shareholding of Continental AG and made a take-over offer of 69.37EUR per share to all shareholders of Continental. At that stage, Schaeffler Group already possessed 7.92% of Continental shares and had entered into swap transaction regarding approximately 28% of the shares. Schaeffler Group stated that the focus of this transaction was on realizing the collaboration of the two global leading automotive suppliers headquartered in Germany, Schaeffler Group would continue to support Continental’s current policy and support its position as a stand-alone and listed company.
Announcement of intended take-over transaction triggered enormous responses within Continental AG and international market alike. After over one-month heated negotiation, with the intent of protecting the interests of shareholders, employees and customers of Continental, Schaeffler Group entered into an investor agreement with Continental. The agreement conveyed the following key messages:
Schaeffler Group will raise its acquisition offer. The acquisition offer will be raised to 75 euros per share and Schaeffler Group guarantees Continental AG up to 522 million euros in compensation, should a change of control causes any negative effects for Continental’s existing financing agreements or lose tax credits as a result of Schaeffler’s investment.
Schaeffler will support Continental’s management board in continuing the company’s strategic direction. Schaeffler Group will maintain all the existing working opportunities, it will respect the rights of employees, work councils and unions at Continental that exist in accordance with the applicable statutory provisions, undertakings, terms and agreements. In addition, Schaeffler 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 headquarter and corporate divisions, as well as its listing on the stock exchange.
Schaeffler Group agrees not to take controlling stake before 2012. Schaeffler agrees to limit its investment in Continental AG to a minority stake of no more than 49.99%. On the event that Schaeffler 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. Dr. Gerhard Schroeder, the former Chancellor of the Federal Republic of Germany is authorized to act as guarantor to protect the interests of relevant parties of Continental AG. Dr. Schroeder is further empowered to ensure that Schaeffler fulfills its obligations and to enforce these through both judicial and extrajudicial means.
On Sept 2, 2008, at the end of the deadline for accepting the offer, the Schaeffler Group, has extended its share in Continental AG to around 48.32%. “This result is a great success for us. We have reached our target of gaining a strategic shareholding of more than 30 percent in Continental AG. This means that talks can begin with Continental as soon as possible about cooperation projects to realize market opportunities for both companies by consolidating expertise in development and innovation. Together Schaeffler and Continental can now develop solutions for the technological challenges of the cars of the future”, said Dr. Juergen M. Geissinger, President and CEO of the Schaeffler Group.
The development of the market position in key future areas of the automotive industry means a considerable potential for value for Continental AG. At the same time, the Schaeffler Group will support Continental’s management with the rapid integration of VDO, which is in both companies’ interests.
With the settlement of conflicts between both companies, Continental AG wishes to conduct smooth cooperation with Schaeffler Group based on the investor agreement. The common goal of both companies is to protect the interests of all parties involved, continually upgrade the value of Continental AG, promote the business development and strengthen its innovation advantages. Scince the products range of both companies are highly complementary in the automotive field, the cooperation will create a win-win situation in facing the fierce competition of today’s automotive industry.
About Continental AG
With the target sales of 26.4 billion Euro in 2008, Continental is one of the leading automotive components suppliers in the world. As the supplier of braking system, powertrain, components for chassis system, automobile instrument board, information entertainment solutions, automotive electronics products, tyres and industrial rubber products, Continental AG has made tremendous contribution in upgrading the driving safety and protecting global climate. Continental AG is also reliable cooperative partner in automobile network communication fields. At present, Continental AG has nearly 200 offices and subsidiaries in about 36 countries all over the world, with a total of 150,000 employees.
About the Schaeffler Group
The Schaeffler Group and its brands INA, FAG and LuK is a renowned supplier to the automotive industry as well as a leading manufacturer of rolling bearings worldwide. The Schaeffler Group and its approximately 66,000 employees at more than 180 locations worldwide distribute precision components and systems for automotive engineering, industry as well as aviation and aerospace. The Schaeffler Group generated sales of 8.9 billion euros in 2007, 60 percent of which were generated in the Automotive division. The Group has more than 29,000 employees in Germany.
