Schaeffler in talks to sell Continental AG stake

28 November 2008

German ball-bearings maker Schaeffler is hoping that a recovery in the share price of Continental AG will help save billions of euros in write downs on its holding in the company, chief executive Juergen Geissinger has said.

Speaking to the media on the sidelines of an event earlier in the week, Geissinger said that he expects that ''when we see how the market and the cooperation with Continental develop, and when the logic has been understood and we have showed results, then the share price will improve accordingly." 

Earlier in 2008, Schaeffler had agreed to keep its holding in Continental at lesser than 50 per cent for four years, in a bit to end a battle over controlling the company, and push through its €75 per share offer for Continental. However, shareholders tendered over 82 per cent of shares in Continental, increasing Schaeffler's holding to around 90 per cent.  (See: Continental agrees to conditional sale to Schaeffler) 

Now, Schaeffler has promised to hand out the excess 40 per cent holding to bankers, who would then sell them further.

A number of parties are said to be in talks to buy stakes varying from 10 to 20 per cent each from the banks. Geissinger said his company was looking at long term investors for the stakes. 

The problem now is that the market price of Continental shares not carrying Schaeffler's offer acceptance rights were trading at €38.60 mid week, valuing the company at €6.2 billion, much below the price of tendered shares.