Car part manufacturer Continental has rejected family firm Schaeffler's unexpected €11.2 billion bid, saying the offer is too low and the tyres-to-brakes company would gain nothing from a merger.
Weekend reports of a potential offer were confirmed on Tuesday when Schaeffler revealed it had clandestinely stockpiled more than a third of Continental's shares via options organised quietly through banks.
With a turnover of almost €9 billion, Schaeffler is one of the largest European industrial companies in family ownership and makes a range of products including ball bearings. The firm is owned by German billionaire Maria-Elisabeth Schaeffler (pictured), widow of the company's founder, and her son.
The world's fourth-largest tyre company believes Schaeffler's offer, at €69.37 does not reflect the value of Continental, which has around 152,000 staff and last year had revenues of €16.6 billion. The tyre maker acquired Siemens' auto electronics unit VDO late last year, which raises Continental's revenues to approximately €26.4 billion.
Continental chief executive Manfred Wennemer has vowed to fight the hostile bid and has implored shareholders not to accept the offer. He has engaged Goldman Sachs to mount a defence. "There is no convincing strategic rationale for a business combination," Continental said.
In attempts to quell management fears, Schaeffler chief Juergen Geissinger has implored shareholders that he has no intention of breaking up Continental or slashing jobs. "Both firms are a good fit," he said.
If Schaeffler succeeds, it would be the first time a German family-owned firm had taken over a blue-chip, DAX-listed company. In the event of a successful sale, Schaeffler would likely delist Continental from the German stock exchange in a similar fashion to when it acquired German auto parts company FAG Kugelfischer in a hostile takeover in 2001.
Schaeffler rolls out deal for tyre maker Continental