HANOVER, Germany (Aug. 21, 2008) — Continental A.G. and Schaeffler K.G. have agreed to a compromise that allows Schaeffler to buy Conti—eventually.
The cornerstones of the agreement are that Schaeffler will raise its per-share offer by about 7 percent and will limit its ownership for the next four years to no more than 49.99 percent. At the same time, Conti CEO Manfred Wennemer has agreed to resign by the end of August.
The rights and interests of Conti employees and other stakeholders are to be overseen by former German Chancellor Gerhard SchrÃ¶der.
Shareholders most likely will have until Sept. 16 to decide whether to accept the improved offer of $110.62 per share, which is a premium of 39 percent on the stock price immediately prior to announcement of the takeover bid in late July, 20 percent on the monthly average price and 8 percent on the three-month average price prior to announcement of the planned takeover bid.
In agreeing to limit its position to a minority stake for four years, Schaeffler agreed to support the ongoing strategy and business policies of Conti's management board—including maintaining Conti's current market and brand appearance—and must not demand a sale of activities or seek other material structural measures.
Meanwhile the two companies agreed they will work together to reach a joint strategy, notably in the powertrain area.
In addition, it has been agreed that there will be no changes to Conti's form of incorporation, its corporate seat, headquarters or business divisions, its listing on the stock exchange, its dividend policy or an increase of its debt-to-equity ratio against the wishes of the corporation.
Mr. SchrÃ¶der has been given the power to enforce all obligations of Schaeffler at any time by legal action or out of court, according to the agreement, and is entitled to request information from Schaeffler about its level of compliance with the obligations stipulated under the Investment Agreement.
Mr. Wennemer, CEO since September 2001, has asked the supervisory board to be released from his responsibilities by Aug. 31. The supervisory board has agreed to this request; his successor will be appointed in the immediate future.