* Schaeffler ended 2008 investment accord
* Continental says Schaeffler move "won't impact" good ties
* Schaeffler says committed to "long-term" holding
(Adds background, CEO comment)
By Andreas Cremer
HANOVER, Germany, May 15 German auto parts and
tyre maker Continental said it was kept in the dark about the
decision of debt-laden top investor Schaeffler to
quit a five-year-old investment accord and does not know how
their future relationship will evolve.
Family-owned Schaeffler, which makes industrial bearings and
transmission parts, said on Monday it would end a 2008 agreement
designed to temporarily limit its stake in Continental
to 49.99 percent to resolve a past row over control of Europe's
second-largest car-parts maker.
Hanover-based Continental expects its "well-functioning and
goal-oriented cooperation" with Schaeffler to continue even
without the agreement but was not briefed about the move, Chief
Executive Elmar Degenhart said on Wednesday.
"A joint termination (of the accord) was not discussed," the
CEO said at the annual general meeting which was attended by
Schaeffler owners Maria-Elisabeth Schaeffler and Georg F.W.
Schaeffler who remained silent during the four-hour session.
"We have no information about the future development of the
Schaeffler holding or other plans by the company," Degenhart
The 2008 agreement, the climax of an extended hostile
takeover battle by the ball-bearing firm, protected Continental
among others from a break-up or a delisting after the departure
of its then management.
Analysts suspect the accord was also designed to prevent any
asset stripping and that its termination might be a prelude to
Schaeffler restructuring the company or reducing its stake.
Schaeffler's debt had peaked at about 12 billion euros
($15.57 billion) as more shareholders than expected took up an
offer from Schaeffler to buy stock.
Operating unit Schaeffler AG and its holding parent
Schaeffler Verwaltungs GmbH now shoulder a combined 10.3 billion
euros in overall debt despite having reduced their stake from
around a level of around 90 percent immediately after the deal.
Its holding in Continental, which earlier this month
reaffirmed its 2013 outlook on the back of a pick-up in
business, is worth almost 12 billion euros, according to Thomson
Continental's shares traded close to 100 euros on Wednesday,
compared with less than 15 euros some four years ago.
"We consider our investment in Continental a long-term
strategic investment aimed at sustainably increasing the value
of Continental AG," Schaeffler said on Monday when announcing to
terminate the accord at its earliest possible date in May 2014.
"We cannot say what will happen after that date,"
Continental chairman Wolfgang Reitzle said.
Schaeffler's earnings before interest and tax (EBIT) last
year fell 16.3 percent to 1.4 billion euros on plunging auto
demand in Europe, where over half of group sales of 11.1 billion
euros were made.
Expecting growth of around 2 percent this year in global car
production, Schaeffler aims to boost sales 4 percent and keep
the EBIT margin steady at about 13 percent.
($1 = 0.7705 euros)
(Editing by Harro ten Wolde and David Cowell)