Continental’s supervisory board on Wednesday was considering ways to deflect a takeover by family-owned Schaeffler Group.
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CEO Manfred Wennemer was presenting a number of strategies including searching for a ‘white knight’ bidder, Thomson Financial quoted Financial Times Deutschland as saying in an unsourced report.
Wennemer was to recommend shareholders reject Schaeffler’s [increased] EUR70.12 per share offer as too low and ask the board to approve a capital increase to dilute Schaeffler’s stake in the company, the paper said.
At 14:00BST a Continental spokeswoman told just-auto the meeting was ongoing, adding the company would issue a statement later, depending on the outcome.
The media reports noted that Schaeffler last week launched a takeover bid for Continental, aiming to acquire control of only ‘more than 30%’ of shares, the legal minimum under German regulation.
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By GlobalDataSchaeffler has, however, already secured access to 36% of Continental, which means it can gain control over the company even if the supervisory board recommends that shareholders reject the offer, Thomson Financial said.
Financial Times Deutschland said Wennemer may also propose that Schaeffler limit its acquisition to a stake of less than 30%, in which case the supervisory board would no longer need to make a recommendation to shareholders.
At the same time, Wennemer has asked Goldman Sachs to find a ‘white knight’ who could step in and buy a stake in the company that is large enough to block Schaeffler, but that is still below 30%, the paper added.
Earlier, Reuters reported that Wennemer appeared to lose the support of key boardroom allies on Tuesday, however.
The news agency said Continental chairman Hubertus von Gruenberg called for a rational approach to the bid from the family-owned ball-bearing maker while sceptical labour leaders sought reassurances that Schaeffler would guarantee jobs.
“What we need is reason, not a fight at any price,” von Gruenberg reportedly told Manager Magazin. “If a takeover is likely, then I prefer that we don’t leave scorched earth behind,” he added.
Reuters said senior labour representatives at Continental called on Schaeffler to provide evidence that it would not cut jobs or break up the company, steps that Schaeffler reiterated it would not take. Continental works council and supervisory board member Michael Deister told the news agency he would be open to Schaeffler’s interest if it would, for example, reveal its financing.
This would help ease worker concerns that the bid might be funded in part by the sale of the company’s tyre business.
Reuters said Wennemer’s opposition to a nil-premium takeover had won the backing of some big shareholders. Two big institutional investors told the news agency they had urged Continental to hold out for a premium.
One reportedly said the company was worth EUR80-100 a share and a takeover offer must value it at 20% on top of that.
Another investor, whose company holds more than 1m shares, said he would consider selling for EUR80-100.
Schaeffler’s legal minimum bid of EUR70.12 values Continental at about EUR11.3bn (US$17.99bn), according to Reuters.
