HANOVER, Germany (Aug. 13, 2008) — Continental A.G.'s supervisory and executive boards are recommending its shareholders not accept a buyout offer from fellow German automotive supplier Schaeffler K.G., while at the same time saying they continue to talk with Schaeffler about possible areas of cooperation.
Conti termed Schaeffler's bid of $104.66 per share (at the Aug. 13 exchange rate) as “inadequate” and not reflective of Conti's long-term potential. The boards also cited the opinions of investment banks Goldman Sachs Group Inc. and JP Morgan Chase & Co. in arriving at their recommendation, released after a joint meeting Aug. 13 in Hanover.
Conti's boards said Schaeffler's offer is equivalent only to the legally required minimum price, and the boards also expressed concern about tax disadvantages and increased refinancing costs that likely would arise related to a takeover.
In addition, they termed the economic advantages presented by a merger with Schaeffler as “limited,” related primarily to the production of transmissions, including future development of hybrid technology. Conti stressed, though, that development partnerships in these areas already exist with other companies.
The executive board said it continues to negotiate with Schaeffler on reaching a solution as soon as possible to the benefit of the company without pre-conditions.
In a statement released after Conti's board meetings and attributed to Schaeffler President and CEO Juergen Geissinger, Schaeffler said it “welcomes Conti's decision to continue the negotiations…. Schaeffler is very confident that the negotiations will lead to a positive result.”