BERLIN (July 29, 2008) — Porsche A.G. is supporting a takeover of Continental A.G. by the Schaeffler Group, a much smaller auto supply company, according to German media.
Porsche is the second German car maker, after Volkswagen A.G., to back the controversial deal, valued at about $18 billion dollars.
Last year, Continental bought VDO Automotive, which makes vehicle electrical systems.
Porsche currently holds 31 percent of VW and has options on a large chunk of the outstanding shares. The German state of Lower Saxony holds a blocking 20.3-percent stake that has come under critical scrutiny from the EU.
Schaeffler announced its surprise bid for Continental in mid-July after securing control of a substantial stake through its banks.
The unexpected move on the listed company by the family-owned group has divided Continental's board, which rejected the bid, accusing Schaeffler of breaching stock exchange regulations.
Germany's financial watchdog, BaFin, is probing the transactions.
However, Continental has said it will seek talks with Bavarian-based Schaeffler, which is owned by billionaire Maria-Elisabeth Schaeffler and her son.
In mid July VW boss Martin Winterkorn backed Schaeffler's move on Continental, saying that while Continental was strong on the electronics side, Schaeffler was strong on the mechanical side.
He warned against a hostile takeover, however.