German auto ram-raid warrants careful driving

Schaeffler AG

20/10/2023 09:09

(The author is a Reuters Breakingviews columnist.  The opinions
expressed are his own.)
    By Neil Unmack
       LONDON, Oct 20 (Reuters Breakingviews) - Schaeffler is
buying car-parts maker Vitesco, both controlled by the same
family, for $4 bln. Minority shareholders can choose between a
low price now or an uncertain future in a conglomerate.
Schaeffler can probably get away with its smash and grab, but it
might backfire later.
    Full view will be published shortly.
    Follow @Unmack1 on X
    
    CONTEXT NEWS
    Greenlight Capital and Harris Associates, both shareholders
of car-parts group Vitesco Technologies, oppose a bid by
Schaeffler for the company, Bloomberg reported on Oct. 17 citing
people familiar with the matter.
    Schaeffler on Oct. 9 announced a tender offer for shares of
Vitesco. IHO Holding, a Schaeffler family vehicle that owns
49.9% of Vitesco and 75% of Schaeffler, will not participate in
the tender. Later, Schaeffler will attempt a
merger with Vitesco. The final share ratio is to be determined
by a statutory valuation process.
    Vitesco said on Oct. 17 that its supervisory board would
form a special committee to evaluate the offer, excluding
representatives that sit on both its and Schaeffler’s board.
    In addition, the company noted “the concerns that Vitesco
Technologies shareholders and employee representatives
have voiced” in relation to the Schaeffler offer. “These
concerns anchor around the price offered and the prospects of
Vitesco in a merged entity,” the company said.
    Vitesco was spun off from automotive supplier Continental in
2021. The Schaeffler family also controls 46% of Continental
shares, following a takeover attempt in 2008.
    Vitesco shares closed at 91.60 euros on Oct. 19, slightly
above the tender offer price of 91 euros.

 (Editing by Liam Proud and Oliver Taslic)
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