Continental has advised shareholders not to accept the Schaeffler takeover offer but its supervisory and executive boards said they remained "open for negotiations in the short-term".

"The price of EUR70.12 in cash per share as offered by Schaeffler KG is inadequate from a financial point of view [and] equivalent only to the legally required mini­mum price and, in the opinion of the supervisory board and executive board, does not reflect the long-term value potential of the company," Continental said in a statement.

The opinions obtained from the in­vest­ment banks Goldman Sachs and JP Morgan... state that the offer does not value the company adequately.

"In case of a takeover tax disadvantages and increased re-financing costs are likely to arise."

Continental said economic advantages presented by a merger with the Schaeffler Group were limited.

"There is the potential to leverage synergies pri­marily in the production of transmissions and, in the future, in the field of hybrid technol­ogy. At the current point in time, development partnerships in these areas already exist with other companies."

Continental CEO Manfred Wennemer told Thomson Financial after a supervisory board meeting on Wednesday that his company remains open for more talks but declined to give any details about the discussions and refused to comment on a newspaper report that Schaeffler was prepared to raise its cash offer to EUR75 a share.

The news agency quoted Continental supervisory board vice chairman Werner Bischoff - who also represents the trade union IG BCE for mining, chemicals and energy industries - as saying that for business strategic reasons, it was "not appropriate to pursue a pure defence policy" in tackling the Schaeffler takeover offer.

"If the Schaeffler engagement strategically makes sense, then the size of the shareholding cannot be the only focus but a lot also depends on discussing reasonably the conditions and modalities of a shareholding," Bischoff reportedly said in a statement.

He also said Schaeffler needed to clarify its exact shareholding in the company, but that he expected the current shareholding it holds is already sufficient to have a representation on the supervisory board.

Bearings-maker Schaeffler has said it controls a 36% stake in Continental directly and indirectly, Thomson Financial noted.

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