Siemens and Continental heads have been discussing Continental taking a stake in Siemens's automotive engineering unit Siemens VDO.

Reuters reported that a meeting between Siemens' Klaus Kleinfeld and Continental's Manfred Wennemer took place between the end of the world economic forum in Davos at the end of January and the beginning of this week.

Two weeks ago Siemens said it would carry out an initial public offering of 25-50% of Siemens VDO. Continental said almost immediately that it would be interested in acquiring that stake.

The head of Continental Automotive, Thomas Neumann, told the German website Automobilwoche that, if the acquisition went ahead, Continental would become the third largest automotive supplier globally. It currently ranks 15th.

Neumann added that a takeover would be a good way for Continental to expand since there are virtually no overlaps in their businesses.