Schaeffler’s token bump sets up bigger battle

Schaeffler AG

27/11/2023 11:11

(The author is a Reuters Breakingviews columnist. The opinions
expressed are their own.)
       LONDON, Nov 27 (Reuters Breakingviews) - Schaeffler’s
 SHA_p.DE  token bump for Vitesco Technologies  VTSCn.DE  may
not ensure a smooth ride. The 3.4 billion euro German industrial
group raised its tender price for shares in auto parts group
Vitesco by 3% to 94 euros. But it’s unlikely to appease some
rebel shareholders. 
    Schaeffler only needs to lock in a small number of shares to
get the first part of its deal over the line. Since the
Schaeffler family owns 49% of 3.7 billion euro Vitesco, and will
back the combination, it only needs a 75% block to push through
the combination at a shareholder meeting. While Vitesco’s board
has approved the deal, which gives its executive Thomas Stierle
control of the combined auto division, it has also said the
tender price is inadequate. With reason: analysts' estimates
compiled by the company on average deem Vitesco to be worth
87.7 euros. On that basis the 94 euros tender price is only a 7%
premium above fair value. 
    Assuming enough shareholders now tender, the final merger
price for any remaining shares will be set by a third-party
valuer. Yet Vitesco’s board, backed by three banks including
JPMorgan  JPM.N  and Lazard  LAZ.N , have now published fairness
opinions saying the company is worth more than 94 euros.
Shareholders, which include David Einhorn’s Greenlight Capital,
have more reason to push for a higher price. (By Neil Unmack) 


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 (Editing by George Hay and Streisand Neto)