Conti boards reject Schaeffler bid -- again

HANOVER, Germany

(Aug. 13, 2008) -- Continental A.G.'s supervisory and executive boards

are recommending its shareholders not accept a buyout offer from fellow

German automotive supplier Schaeffler K.G. while at the same time

saying they continue to talk with Schaeffler about possible areas of

cooperation.

Conti

termed Schaeffler's bid of $104.66 per share (at the Aug. 13 exchange

rate) as “inadequate” and not reflective of Conti's long-term

potential. The boards also cited the opinions of the investment banks

Goldman Sachs Group Inc. and JP Morgan Chase & Co. in arriving at

their recommendation, released after a joint meeting Aug. 13 in Hanover.

Conti's

boards said Schaeffler's offer is equivalent only to the legally

required minimum price, and they Conti's boards also expressed concern

about tax disadvantages and increased refinancing costs that likely

would arise related to a takeover.

In

addition they termed the economic advantages presented by a merger with

Schaeffler as “limited," related primarily to the production of

transmissions, including future development of hybrid technology. Conti

stressed, though, that development partnerships in these areas already

exist with other companies.

The

Executive Board continues to negotiate with Schaeffler on reaching a

solution as soon as possible to the benefit of the company without

pre-conditions.

In

a statement released after Conti's board meetings and attributed to

Schaeffler President and CEO Juergen Geissinger, Schaeffler said it "welcomes

Conti's decision to continue the negotiations…. Schaeffler is very

confident that the negotiations will lead to a positive result.”