Business and Finance

German ball-bearing maker Schaeffler has launched a hostile $18 billion bid to buy tire-to-brakes firm Continental (CONG.DE: Quote, Profile, Research, Stock Buzz) as the dispute over its takeover tactics continues.

If the takeover happens, it would be the biggest so far this year in Europe and would put the combined group head-to-head with Robert Bosch ROBG.UL for the position of second-biggest global car-parts supplier behind Japan’s Denso (6902.T: Quote, Profile, Research, Stock Buzz).

But its advances have provoked a fight between Schaeffler, owned by billionaire Maria-Elisabeth Schaeffler ID:nL15284836, and Continental Chief Executive Manfred Wennemer.

On Wednesday, Schaeffler bypassed Wennemer and went directly to investors, offering to give them 70.12 euros cash for each of their shares.

Even if the offer — below Continental’s share price of around 72 euros — fails, Schaeffler is well positioned to win control of its bigger rival.

The predator has arranged to secure about 36 percent of Continental’s stock through a series of swap deals that banks have organized on its behalf.

By lodging an official offer, Schaeffler will not be obliged to make another and could creep to majority control by buying up shareholders individually.

Schaeffler’s move is similar to Porsche’s (PSHG_p.DE: Quote, Profile, Research, Stock Buzz) takeover of Volkswagen (VOWG.DE: Quote, Profile, Research, Stock Buzz) quick payday. The smaller sports car maker also bought a stake of 30 percent, then made a token takeover bid and is now creeping towards majority control. 

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