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Continental will Decide whether Combine with Schaeffler Completely Combination before the End of July
2009/7/28 14:05:37

         The consolidated motion of Continental and Schaeffler has been put into the schedule. Supervisory board of Continental expressed, they have required the board of Directors to consider all aspects, especially financial viability of the combination in the June 8 after meeting. At the end of July, there must be a conclusion.

          “We must inspect seriously whether the combination is in keeping with the economic benefits of continental,” the chairman of Supervisory board of Continental Rolf Koerfer said,” Business logic of the merger is obvious, after the merger company will be the second largest car parts suppliers.” The sales can reach to 33 billion euros. 

CEO Jurgen M. GeiBinger of the Schaeffler Group, who was elected into the Supervisory board of Continental in April, said "I believe that it’s benefit to two companies and customs, whether the management or the technology.  Now, the most important problem is that how the merger achieved implemented. In addition, the merger brings opportunities and risks in the economic and financial aspects. We must consider fully. "

Last year, Schaeffler Group surprised to put the plan named “snake swallowing” continental into practice. Now they have hold 49.9% stake of the continental directly and hold 40% stake indirectly. Therefore Schaeffler Group carried a huge debt. And the ownership had been challenged. Then Continental and Schaeffler discuss the cooperation mode, include Continental reverse takeover Schaeffler. Its creditor bank also show that they may supply loan and put forward implementing debt-to-equity swap trade temporarily. Now they have decided to cooperate difficultly in procurement. This statement marked they have sold the first step in casting off the rights (this resulted in more than two executives to leave company).

Karl-Thomas Neumann, who is the Chairman of the Board of Continental, said that over the past few months with the Schaeffler Group had a very constructive negotiation. Neumann wants to ensure the integrity of the Continental if two companies combine. There was news that the tire and non-tire rubber tires may be spin-off business when the Continental Schaeffler wanted to holding the Continental.

“If do the merger, the advantage in the electrical connection of Schaeffler and the electronic and software systems of Continental will be a very beautiful complementation. The non-tire rubber tires of Continental and the Industrial business of Schaeffler are also good for achieving the balance between automotive and non-automotive after combining.” Neumann said, "Now there are a lot of uncertainties, and the merger is at the stage of considering. We will make great efforts to estimate the feasibility of merger whether it would take more value to creditor and stockholder. At the same time, we may keep the status of listed companies.” In a word, Neumann also keeps the optimism.

But not long ago, the Morgan Stanley who Group’s rating to Continental from “reduce” to “neutral” is not very optimistic about the merger of the two sides and think its risk very great. “It greatly exceeded the scope of the business logic”; but also known as “Continental is more favorable to Schaeffler. It have rights to decide the merger according to own situation.”  


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