HANOVER, Germany (Jan. 26, 2006)-Continental A.G. will set up its rubber group-consisting of its tire and ContiTech businesses-as an independent entity as part of its strategy to integrate its automotive supply activities with those of Schaeffler Group, Conti's largest shareholder and business partner.
There are no formal plans to sell the rubber business, just "initiate a process to create an organizationally and legally independent rubber group," Conti said in a statement released Jan. 24. Conti's Supervisory Board Chairman Hubertus von Gruenberg, who had opposed the combination with Schaeffler, will quit his chairman's post but remain a member of the board and oversee the rubber group revamp process.
Conti and Schaeffler did not divulge specifics of their new strategic plans, other than to say it is their joint ambition to create a "global champion" in the automotive supplier business.
The decisions, made Jan. 24 at a meeting of Continental's supervisory board, are seen by automotive industry observers as a victory for Schaeffler, which controls 49.9 percent of Continental's shares directly and nearly 90 percent directly and indirectly after launching a hostile takeover of Continental last year.
At the same time Alan Hippe, Conti's chief finance officer and head of the rubber division, will leave the company at his own request on Feb. 28. Hippe will join ThyssenKrupp, Europe's biggest steelmaker, as its head of finance on April 1.
Schaeffler co-owners Maria-Elisabeth Schaeffler her son Georg Schaeffler, CEO Juergen Geibinger and legal adviser Rolf Koerfer will join Continental's supervisory board, in line with covenants of Schaeffler's purchase of Conti.
Schaeffler will propose Koerfer replace Von Gruenberg as chairman of the supervisory board at Conti's annual shareholders meeting April 23.
"I am very pleased that we have found a solution which reflects the interests of all those involved," von Gruenberg said. "For the task of developing an entrepreneurial concept for an independent rubber group, I am ready to assist with my advice."
Commenting on the moves, Maria-Elisabeth Schaeffler said, "I am very happy that what belongs together can now grow together."
Schaeffler and Continental had been in a bitter power struggle after Schaeffler launched its bid last year for the bigger company. The takeover saddled Schaeffler with a net debt of nearly $13 billion. Schaeffler pressed for the integration of the Schaeffler and Continental automotive businesses to create synergies and to help it finance its debt.
Schaeffler makes bearings, engine components and clutches under the INA, FAG, Luk brands. Its revenues were nearly $12 billion in 2007.
Conti's targeted annual sales for 2008 are more than $32 billion, including roughly $9.6 billion in tire sales and $4.6 billion in non-tire rubber products under ContiTech.
Together Conti and Schaeffler have about 200,000 employees.
Other Crain Communications Inc. publications contributed to this report.