BRUSSELS (Oct. 27, 2004) — The European Commission has approved Continental A.G.'s takeover of industrial rubber products maker Phoenix A.G. with the proviso that Conti sell three businesses that otherwise would put Conti in a dominant market position in those sectors.
The commission's approval clears the way for the two companies to complete the $275 million deal first announced in April and merge Phoenix's remaining activities with ContiTech's various business units, according to statements from both companies.
The deal will create a business entity with about $3 billion in annual sales from activities in several sectors, including hose, belts, molded goods, calendered goods, air springs, anti-vibration components and automotive interiors.
To comply with the commission's ruling, Conti has agreed to sell to as-yet unidentified purchasers approved by the commission Phoenix's share of Vibracoustic Holding and its commercial vehicle original equipment air spring business as well as its own heavy-duty conveyor belting business. Phoenix's partner in Vibracoustic is Freudenberg Group.
“We expected certain strings to be attached, even if we consider them unwarranted in view of the competition in the OEM sector worldwide,” Conti's board said in a prepared statement. “The takeover…will allow us to hold to our plan of further expanding the position of our ContiTech division as one of the world's leading specialists in rubber and plastics technology.”
Earlier, Conti said it calculated synergy effects of about $36 million per year.
Phoenix shareholders earlier agreed to Conti's bid of approximately $18 per share, which was a 15-percent premium over the prevailing price the day of the announcement.