Schaefflers step out of shadows to defend Continental takeover
The Schaeffler family has, for the first time, made public comments about its takeover of rival Continental. In a wide-ranging, six-point defence of their actions, Maria-Elisabeth Schaeffler and son Georg have decided to set the record straight on their plans for the German automobile supplier as speculation builds in the mass media that the business could fail.
Despite the well-documented troubles facing the industry, the Schaefflers claim the response from automobile manufacturers to the Continental deal remains positive. "We are still convinced that the years to come will prove how successful this alliance of Schaeffler and Continental can be," they said.
They also refuted the allegation that they are "gamblers who have speculated and lost," referring to the fall in the company's share price since the takeover was launched and the increased debt they have taken on. "Our alliance with Continental has nothing at all to do with stock exchange speculation. We are no short-term oriented financial investors, but rather entrepreneurs with long-term goals and concepts," they said.
Acknowledging that the automotive industry is undergoing a historically difficult period, they said the alliance with Continental is, nevertheless, "a necessary step, especially for the Schaeffler Group as a family-owned company planning for the long term." They said their objective is to secure the future of both companies by bringing together two German technology leaders who can play a major part in top global competition.
Describing the current economic climate as "the most dramatic and rapid breakdown of the global economy in the past 80 years," the mother and son team said they, in common with many others, could never have predicted it.
The "massive difficulties" caused by the non-functioning financial and capital markets have forced the company to seek a joint and responsible solution with banks, potential investors and politicians. In particular, the collapse of Lehman Brothers caused investors to flee, leaving the Schaefflers with 90% of Continental's shares – much more than they wanted.
While admitting that no new investor has yet been found, they said that they expect to find one or more by the time the economic situation recovers. Consequently, the family has decided to enter into discussions with politicians about securing interim financial aid. This is, however, "a special, exceptional situation for a company that is sound at the core." They also promise that any aid "will not burden" taxpayers and that any statutory interest and fees incurred will be paid.
In addition, they will use their family's wealth to help it through the current period. "Since the wealth of the owners is firmly bound up in the company, the Schaeffler family is prepared to divest itself of part of this wealth and to pay its debts with the proceeds," they said.
Finally, the Schaefflers call for more matter-of-fact public discussions to ensure a rapid and sustainable solution. "Our family has always re-invested the profits in the company instead of withdrawing them and using them for private purposes. If it had been our goal simply to add to our personal wealth, we would not have invested in the further development of the Schaeffler Group during the past 12 years and we would not have become involved with Continental."
They claim the takeover is fundamentally about securing the technological basis of two German world market leaders in the long term and point to the fact that the Schaeffler Group has more than tripled the number of employees and its turnover since 1996.
Consequently, they will do "everything in our power" to prevent pointless asset stripping driven by short-term interests.
Schaeffler is a privately-owned, €9 billion engineering group that specialises in ball bearing manufacture. It made a hostile takeover of much larger rival Continental in August last year.
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