Continental denies it plans to drop Schaeffler merger plan

ERJ staff report (AN)

Frankfurt, Germany (Reuters) -- German supplier Continental AG today denied a report that it no longer aims to merge with bearings maker Schaeffler.

German monthly Manager Magazin earlier today cited company sources as saying Continental's advisers -- Perella Weinberg, Freshfields and Ernst & Young -- had presented a report to the company's management board this month, showing a merger would bring very little financial gain.

"Our goal remains a combination of the two companies, for which we are preparing," Continental said in a statement.

"We have not yet agreed on a concrete timetable with the major shareholder (Schaeffler)."

Schaeffler declined to comment on the report, referring to Continental.

Manager Magazin had said Continental's advisers recommended Schaeffler merge its automotive business with Continental and keep a 35 percent stake in the company.

"A 35 percent... stake of the major shareholder (Schaeffler) in Continental is made up and was never discussed," Continental Chairman Wolfgang Reitzle said in the statement.

Schaeffler took control of the much larger German auto supplier about two years ago after launching a hostile $18 billion bid in which it ended up collecting more shares than it could afford, lumbering itself with billions of euros of debt.

Schaeffler and Continental have been planning to merge their businesses but Schaeffler CEO Juergen Geissinger in September backed away from committing to a deal any time soon.

From Automotive News (A Crain publication)