Continental AG reportedly launched a €227 million ($US277 million) bid for German rubber and plastic products maker Phoenix on Monday with a view to beefing up its profitable ContiTech unit.
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“The integration of Phoenix into the Continental Group will substantially enhance the combined entity’s competitiveness and long-term growth prospects,” Continental Chief Executive Manfred Wennemer said in a statement cited by Reuters.
Combining Phoenix, which makes suspension and insulation systems for cars, trucks and trains, with ContiTech would yield annual savings of some €30 million, he reportedly said.
Reuters noted that Phoenix would add €1.1 billion in sales to ContiTech’s 1.76 billion, generated from providing rubber and plastics products including hoses, conveyor belts, air springs and transmission systems to a range of industries.
Continental – best known as a tyre maker – reportedly said the €15 per share bid already had the support of Daun & Cie and German state bank WestLB, who between them own just over 37% of Phoenix’s 15.16 million shares in issue.
“It’s a perfect fit,” Rolf Woller, analyst at HVB Group in Munich, told Reuters, adding the bid looked fair given that it offered a 40% premium to the average price over the last three months.
“There are huge overlaps in the two businesses which allow for economies of scale while Phoenix also has some more specialised products that will give Continental new, high-margin business areas,” he reportedly said.
According to Reuters, Phoenix said that its management and supervisory boards would examine the bid and issue a statement – a response required by German takeover law that should weigh up the price, consequences for the firm and its staff, and the bidders’ aims.
