FRANKFURT (May 14, 2013) — Schaeffler A.G., the largest shareholder of Continental A.G., is ending a "mutual investment" agreement between the two German companies that they signed in 2008 that limited Schaeffler's direct ownership in Conti to 49.99 percent.
Schaeffler's investment in Conti five years ago was supposed to be the prelude to a merger of the two automotive supply companies.
Neither company elaborated on the significance of the announcement other than to say: "The investment agreement no longer has any practical relevance for either company since key provisions of the agreement expired in August 2012."
In a prepared statement, Continental CEO Elmar Degenhart said the company is "confident that the two companies will continue their very good and goal-oriented cooperation on into the future."
Family-owned Schaeffler, which makes industrial bearings and transmission components, agreed in August 2008 to temporarily limit its stake in Continental in a deal to resolve a dispute over control of the company, which also is Europe's second-biggest auto supplier.
Debt ballooned at Schaeffler to more than $15 billion after the efforts to limit its holding in Continental backfired amid the global recession, when more shareholders than it was expecting accepted its offer to buy stock.
Schaeffler parked the excess Continental shares at banks and scaled back the stake to 49.9 percent in September 2012. At one point, its direct and indirect holding totalled 90 percent.
Continental and Schaeffler are cooperating on about 30 projects, Mr. Degenhart said earlier this year.
"We consider our investment in Continental a long-term strategic investment aimed at sustainably increasing the value of Continental," Maria-Elisabeth Schaeffler and Georg F.W. Schaeffler, the bearing maker's owners, said in the statement.
Story based in part on reporting by Automotive News Europe.