GERMANY: Continental boards' 'No' to Schaeffler offer
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.