* Schaeffler terminates August 2008 investor agreement
* Agreement protected Continental, now seen as irrelevant
* Schaeffler debt at 10.3 bln eur after leveraged buyout (Adds details, background)
FRANKFURT, May 13 (Reuters) - Schaeffler has terminated a 2008 investor agreement with Germany's Continental AG, both companies said on Monday, potentially opening the door to a break-up or full acquisition of the tyre maker.
The agreement, the climax of an extended hostile takeover battle by the German ball-bearing firm, protected Continental among others from a breakup, a de-listing or asset strip after the departure of its then management.
Schaeffler, which currently owns 49.9 percent of Continental, said that the bulk of the agreement had ceased to be practically relevant in August 2012.
Both companies said that little would change concerning their loose alliance.
"We consider our investment in Continental a long-term strategic investment aimed at sustainably increasing the value of Continental AG," Schaeffler owners Maria-Elisabeth Schaeffler and Georg F.W. Schaeffler said in the statement.
Operating unit Schaeffler AG and its holding parent Schaeffler Verwaltungs GmbH shoulder a combined 10.3 billion euros in overall debt from the deal despite having reduced their stake from around a level of around 90 percent immediately after the deal.
Continental Chief Executive Elmar Degenhart, who was installed by the Schaefflers as CEO of the tyre and brakes manufacturer in 2009, called the move "understandable".