The German government could provide embattled Continental and Schaeffler Group with financial support, Lower Saxony state premier Christian Wulff has told Focus magazine.
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If the two companies can agree on a viable post-merger business plan, then loan guarantees would be half financed by Germany’s economic stimulus fund and the other half by the states in which the companies have plants, he told the magazine.
Schaeffler last year launched a hostile US$18bn bid for Continental but ended up collecting more shares than it could afford and accumulating a debt mountain as car sales collapsed.
Schaeffler now has debts of almost EUR11bn ($15.6bn) and may have to lay off 4,500 staff as it struggles through a recession which it believes may last another four years.
The company last month said it was mulling a plan that could see it take the junior role in a merger with Continental. Wulff told Focus: “If the concept is viable, we will examine guarantees to support the project.”
He added that all parties involved, including owners, banks, the government and employees would need to contribute to a possible solution.
