Case Summary
The German based Schaeffler Group is privately owned by Maria Elisabeth Schaeffler and her Son Georg Schaeffler. In 2007 the company was the world's second-largest manufacturer of ball bearings. In order to become the world leader in the automotive components industry, on 15 July 2008, Schaeffler launched a bid to acquire publicly-held Continental AG, the world's six-largest automotive components supplier. After fiercely opposing the bid, Continental ultimately accepted Schaeffler's offer, but compelled Schaeffler to sign an investment agreement which was largely in its favor. Schaeffler's bid was a bold move, considering the fact that it was nearly three times smaller than Continental. Also, financing the acquisition and taking over Continental's businesses during times of severe global financial and economic crises was a big challenge.
Key Issues
The student’s task is to analyze the case from the point of view of Schaeffler’s Owner Maria Elisabeth and Georg Schaeffler on January 6, 2010, after Continental’s share issue of 31 million new stocks. The reader will learn why it is useful for companies to buy others and with which strategy Schaeffler used for its takeover. Furthermore an analysis of the share price will show the student how mergers influence the company’s value on the stock exchange.
Table of Contents
1 An uncertain future
2 Schaeffler Group takes over Continental AG
2.1 Refinancing of the Continental AG
2.2 Continental’s Capital Increase
3 Schaeffler Group
3.1 Genesis of the Schaeffler Group
3.2 Owners/Management
4 Continental AG
4.1 Structure of the Corporation
4.1.1 Automotive Group
4.1.2 Rubber Group
4.2 Genesis of the Continental AG
4.3 Management
5 Automotive Components Industry
5.1 Industry development
5.2 Top Competitors Schaeffler KG
5.3 Top Competitors Continental AG
6 The takeover’s consequences
7 Exhibit
Objectives and Topics
This thesis examines the hostile takeover of Continental AG by the family-owned Schaeffler Group, analyzing the strategic motivations, the financial challenges during the global economic crisis, and the subsequent structural adjustments required to ensure the company's survival.
- Strategic dynamics of unsolicited mergers and acquisitions
- Financial engineering and the use of cash-settled equity swaps
- The impact of the global financial crisis on automotive suppliers
- Corporate governance and family ownership influence
- The evolution of the automotive components industry and OEM relationships
Excerpt from the Book
Schaeffler Group takes over Continental AG
On 11 July 2008, a team of the Schaeffler Group meets the trio of Continental, Hubertus von Grünberg, Werner Wennemer and CFO Alan Hippe in a conference room of the airport in Frankfurt. Maria-Elisabeth and Georg Schaeffler, CEO Jürgen Geißinger as well as their lawyer Rolf Körfer communicate to the Continental management that Schaeffler has already secretly hedged access to 36 percent of Continental's shares. (see Exhibit 1) The proud German DAX 30 company is not amused by this move and rejects the unsolicited bid of the smaller family-owned conglomerate with unusually harsh words, alleging that Schaeffler had "secured access to Continental's shares in an unlawful manner". Schaeffler reacts instantly, claiming that its strategy is in full compliance with the law. Germany's financial watchdog decides to launch a probe. However the Federal Financial Supervisory Authority (BaFin) already indicated that Schaeffler did not violate its disclosure obligations.
It seems that the battle is already decided before it even started. Full of anger but at the same time defenseless, Wennemer attacks the family Schaeffler and CEO Geißinger of being egoistical, autocratic and irresponsible in front of the press a few days later.
Summary of Chapters
1 An uncertain future: Highlights the risks of post-deal integration and the lack of a clear strategy following the takeover attempt.
2 Schaeffler Group takes over Continental AG: Details the timeline of the hostile bid, the regulatory reactions, and the complex refinancing efforts during the financial crisis.
3 Schaeffler Group: Provides a historical overview of the company's development and profiles its leadership.
4 Continental AG: Describes the corporate structure, its various divisions, and its historical path from inception to becoming a major international supplier.
5 Automotive Components Industry: Analyzes the market environment, industry trends, and the competitive landscape surrounding the major players.
6 The takeover’s consequences: Discusses the aftermath of the merger attempt and the financial strain imposed by the acquisition.
7 Exhibit: Compiles supporting documents, visual data, and personal descriptions relevant to the case analysis.
Keywords
Schaeffler Group, Continental AG, Hostile Takeover, M&A, Automotive Industry, Equity Swaps, Financial Crisis, Refinancing, Corporate Strategy, Shareholder Value, Automotive Components, Industrial Management, Capital Increase, Mergers, OEM.
Frequently Asked Questions
What is this thesis primarily about?
The thesis analyzes the hostile takeover attempt of Continental AG by the Schaeffler Group, documenting the corporate battle and the subsequent financial and structural implications for both firms.
What are the core thematic fields covered?
Key topics include corporate M&A strategies, the mechanics of equity swaps, the economic impact of the 2008 financial crisis on automotive suppliers, and corporate governance.
What is the primary research goal?
The study aims to provide a comprehensive analysis of the takeover process, exploring why the acquisition was attempted and how the involved parties managed the resulting crises and restructuring.
Which scientific methods were applied?
The work utilizes a case study approach, synthesizing corporate reporting, financial data, and media documentation to evaluate the strategic and managerial actions taken by the firms.
What is covered in the main section?
The main sections detail the takeover timeline, the historical development of both companies, an analysis of the automotive components industry, and the impact of the merger on market positions.
Which keywords define this work?
Essential keywords include M&A, hostile takeover, automotive industry, equity swaps, financial crisis, restructuring, and industrial management.
How did cash-settled equity swaps facilitate the takeover?
They allowed Schaeffler to secretly accumulate an interest in Continental shares without triggering immediate mandatory disclosure requirements, effectively securing a significant stake before the official announcement.
What role did the financial crisis play in this takeover?
The global financial crisis, particularly the collapse of Lehman Brothers, caused a massive drop in share prices, turning an ambitious acquisition into a struggle for survival due to high debt burdens and plummeting valuations.
- Quote paper
- Harald Augeneder (Author), 2010, The Takeover Dispute between Schaeffler Group and Continental AG (Case Study), Munich, GRIN Verlag, https://www.grin.com/document/160480
