FRANKFURT (July 15, 2008) — Family-owned Schaeffler Group controls some 36 percent of Continental A.G.'s stock, according to Handelsblatt, a German commercial economy newspaper, which cited financial sources familiar with the matter.
Under German law, a 30-percent stake in a company obliges the holder to make a full takeover bid.
Schaeffler does not intend to make a hostile takeover bid and consequently de-list Continental, the German weekly business magazine WirtschaftsWoche reported on its Web site, citing persons familiar with the matter.
The report said Schaeffler only eyes a significant minority stake in Continental, adding that Schaeffler also has no plans to break up the company.
Continental shares on July 14 climbed 22 percent to close at 65.80 euros on confirmation the companies had made contact.
Handelsblatt, which is published by the Verlagsgruppe Handelsblatt in DÃ¼sseldorf, Germany, said Schaeffler accumulated its stake in Conti through stock options bought by a number of banks on its behalf, including Royal Bank of Scotland, Deutsche Bank, Dresdner Bank and Merrill Lynch, to avoid passing disclosure limits.
The report said Schaeffler has largely followed the strategy of Porsche A.G., whose accumulation of shares in car maker Volkswagen A.G. went largely unnoticed.
The newspaper cited sources close to the Continental supervisory board as saying CEO Manfred Wennemer and Chief Financial Officer Alan Hippe are drafting a strategy to fight a takeover.
The two companies confirmed on July 14 that they had held brief talks but did not provide details, according to Automotive News, a sister publication of Tire Business.
Media reports said Schaeffler plans to offer more than 10 billion euros for Continental.
However, analysts have said a 10-billion-euro bid will not be sufficient to acquire Continental, as it fundamentally undervalues its long-term potential.
Separately, Financial Times Deutschland reported Schaeffler controls some 30 percent of shares in Continental.
Reuters contributed to this report in Automotive News.