HANOVER, Germany (Aug. 14, 2008) — Continental A.G.'s supervisory and executive boards are recommending its shareholders not accept a buyout offer from automotive supplier Schaeffler K.G., but added that 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.