New investors are being sought for a planned merger of Continental and Schaeffler’s automotive component businesses.
The companies announced yesterday that they would divide Continental into two units, a tyre and rubber group and an autoparts group. The autoparts groups would include around half of Schaeffler’s bearings business.
Continental’s chairman-designate, Rolf Koerfer, told Reuters on Tuesday “Schaeffler is looking for investors for the joint automotive business of Conti and Schaeffler.” He did not say how much of the company would be sold.
By merging the two businesses, Schaeffler is hoping to achieve cost savings from joint purchasing. This could be 3-5% of their annual combined purchasing spend of around EUR12bn.
Koerfer, a lawyer and business advisor to Schaeffler, was named chairman after Schaeffler appointed four new members to the Continental board. He said there were no plans for investors to be offered a stake in the family-owned Schaeffler group.
Separately, two German states have said they are in talks over possible state aid for Continental and Schaeffler. The two companies have a combined debt of EUR22bn, following Continental’s acquisition of Siemens automotive component unit, VDO, and Schaeffler’s purchase of its Continental stake.
Bavaria and Lower Saxony, the two states in which the companies are headquartered, are reported to be discussing the possibility of loan guarantees. Lower Saxony is reportedly considering taking a stake in the Continental tyre division.
Any decision to grant state aid to privately-owned Schaeffler would be highly controversial. One union leader told German media that, while he would want to ensure that jobs were guaranteed, it was not the job of the state or society to protect the private means of the Schaeffler family and their speculative ventures – Schaeffler has a reputation for being a highly secretive company with a lack of transparency in its business operations.
Suspicions are being voiced already that Schaeffler may be planning to sell off Continental’s tyre and rubber operations.