August 9, 2008 / 11:10 AM / in 11 years

Continental eyes acquisition for bid defense: paper

FRANKFURT (Reuters) - Continental (CONG.DE) is considering buying a peer company as part of its defense against a hostile 11.3 billion euro ($17 billion) bid from Schaeffler Group, the Financial Times reported on Saturday.

The paper quoted people close to the situation as saying Continental was in “concrete talks” with several listed and unlisted international rivals about a possible multi-billion-euro deal.

It said any deal, which would be structured as an all-share bid, was likely to be funded via a capital increase of about 20 percent, which would be worth more than 2 billion euros.

Schaeffler, an automotive supplier, holds 8 percent of Continental shares and has access to a further 28 percent stake, secured by Merrill Lynch using cash swaps.

A Continental spokesman declined to comment.

Earlier this month, Schaeffler warned Continental not to resort to a big capital increase as a way to fend off its bid.

Reporting by Mantik Kusjanto; editing by David Stamp

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