Rift in Continental's Top Management

A rift in Continental’s top management resurfaced Monday, just as the car parts maker entered a crunch week in its takeover battle with Schaeffler, the rival that launched a €11.3bn ($16.7bn) bid one month ago.

It has emerged that Hubertus von Grünberg, Conti’s supervisory board chairman, last week urged Manfred Wennemer, chief executive, to include him in the negotiations with Schaeffler’s management, people close to the company said.

However, this was brusquely dismissed by Mr Wennemer, who felt he had not been given enough backing by his chairman in his fight against Schaeffler’s hostile takeover approach.

One board member said that Mr Wennemer had to be persuaded by Mr von Grünberg and other board members to put the defence against Schaeffler on hold and re-enter negotiations. “Mr Wennemer had fallen in love with some torture equipment to use against Schaeffler,” the board member said.

Last week, Schaeffler paved the way for a friendly settlement of one of the fiercest takeover battles corporate Germany has seen in recent years after it said it was willing to increase its €11.3bn bid for Conti.

On Tuesday, Mr Wennemer and two other Conti executives will recommence talks with Schaeffler’s management.

Mr von Grünberg, who is currently travelling abroad and could not be reached for comment, has been opposed to a harsh fight against Schaeffler, saying Conti should not leave “scorched earth” behind.

He had told other directors last month that he thought Schaeffler had already succeeded in its bid after gaining access to 36 per cent of the shares and that resisting would damage Conti.

However, Mr von Grünberg’s own role has come under scrutiny. Only two years ago he invited Schaeffler to talk with Conti’s management about the acquisition of a big stake. Mr von Grünberg knows Schaeffler very well as, until 10 years ago, he had been its adviser. According to Schaeffler, Mr Wennemer abandoned those talks as he saw no need as Conti later acquired the automotive company VDO. Mr von Grünberg’s appeasing stance on Schaeffler has also upset some of Conti’s investors as they think he is not willing to fight for a premium.

This week is key in the negotiations between Mr Wennemer and Jürgen Geissinger, head of Schaeffler. Both sides have to come to an agreement before August 27, the day Schaeffler’s €70.12 a share offer expires.

However, Conti’s management is likely to seek an agreement by this Friday as it is the latest date it could convene a shareholder’s meeting.

Talks held last Thursday still showed striking differences over the price, compensation for possible tax losses and Schaeffler’s willingness to guarantee longterm not to break up Conti or shed jobs.

Source: FT.com/August 19

Credits: Jarvis