HANOVER, Germany—Schaeffler K.G.'s hostile take-over attempt of Continental A.G. has ended with a compromise that eventually will give Schaeffler control of the tire and automotive parts maker.
Schaeffler will raise its per-share offer by about 7 percent and limit its ownership for the next four years to no more than 49.99 percent, the companies said. At the same time, Manfred Wennemer, 60, who has served as Conti CEO since 2001 and led the opposition to the takeover, has agreed to resign by the end of August.
News reports from Europe said Thomas Neumann, a Conti management board member, will become CEO.
The rights and interests of Conti employees and other stakeholders are to be overseen by former German Chancellor Gerhard Schroeder.
Shareholders probably will have until Sept. 16 to decide whether to accept the improved offer of $110.62 per share, a premium of 39 percent on the stock price immediately before the 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 will 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 to work together to reach a joint strategy, notably in the powertrain area.
There also 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.
Wennemer opposed Schaeffler's involvement in Conti, and said the firm's tactics to acquire a 36-percent stake in the company between March and July were “high-handed and irresponsible.”