Continental board set to consider Schaeffler bid

FRANKFURT, July 23 (Reuters) - The supervisory board of Continental AG (CONG.DE) will discuss on Wednesday an unsolicited 11.3 billion-euro ($18.0 billion)bid from bearings maker Schaeffler, in a meeting that could decide the fate of Chief Executive Manfred Wennemer.

Wennemer has vehemently opposed the advances of Schaeffler, accusing the far smaller family owned auto parts supplier of opportunism and condemning its bid as lacking a convincing strategic rationale.

Wennemer, however, is finding few boardroom allies, since labour unions that have long fought his stringent cost cuts have said they could be open to an approach and his own chairman openly questioned the wisdom of a defence.

German media have reported that Wennemer could resign on Wednesday and said management board member Karl-Thomas Neumann was waiting to replace him as Schaeffler's favoured candidate. However, Continental has denied this and Neumann dismissed it as "nonsense".

The board is due to meet at around 1100 GMT to discuss the nil-premium offer of 70.12 euros per share. Continental shares were trading at 73 euros at 0740 GMT.

Schaeffler made headlines in 2001 with a spectacular hostile takeover offer of a listed German rival shortly after markets tanked following the Sept. 11 attacks. It has carefully arranged access to 36 percent of Continental's shares without triggering any disclosure requirements.

Its management has repeatedly dismissed Wennemer's offer of a 20 percent stake as insufficient, campaigning instead for a deal that could see it gain control of a company that generates three times as much in revenue.

While Continental's expertise in automotive electronics gives it a competitive advantage in the industry, analysts say Schaeffler is in increasing need of a partner since it is exposed to rising costs for steel and other raw materials.

Schaeffler has repeatedly said it has no plans to cut jobs or break up Continental, and aims to hold onto its tyre business. (Reporting by Christiaan Hetzner; Editing by Quentin Webb)