Continental AG drops plans to merge wth Schaeffler

Article by Christian Andrei, on December 21, 2010

Continental AG doesn’t anymore intend to merge with bearings maker Schaeffler, according to Manager Magazin, a German publication. Earlier this month, the advisers of the German automotive supplier presented a report to its management board that indicated how a merger would result in very little financial gain, according to sources.

The magazine said that instead, the advisors made a recommendation to have Schaeffler merge its automotive business with Continental and retain a 35% stake in the company.

The magazine said that the deal will permit Continental to remain listed, and Schaeffler would keep significant control. Continental and Schaeffler have not commented on this latest report.

The magazine also reported that Schaeffler will be the one to make the final strategic decision instead of Continental.

Two years ago, Schaeffler took control of the much larger Continental after launching a hostile $18 billion bid in which it ended up collecting more shares than it could afford, burdening itself with billions of euros of debt.

Schaeffler and Continental were discussing a plan to merge their businesses but last September, Schaeffler CEO Juergen Geissinger backed away from committing to a deal in the immediate future.

A merger would result to an automotive supplier with over 30 billion euros ($39.5 billion) in annual sales and about 200,000 employees. [via autonews - sub. required]

Topics: continental, germany

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