 Wealthy widow battles corporate cooperation
(China Daily)
Updated: 2008-07-25 07:47 Maria-Elisabeth Schaeffler, a former medical student and opera patron, inherited control of Schaeffler Group when her husband died 12 years ago. Today she is leading the battle against Germany's tradition of corporate cooperation. On July 15, Schaeffler Group made an 11.3 billion-euro bid for Continental AG, Europe's second-biggest tiremaker, after saying it controlled almost 36 percent of the company's voting rights. It is the second unsolicited bid made by Schaeffler, 66, since 2001. Continental rejected the offer on Wednesday as too low. Nine years ago, Vodafone Plc's hostile bid for Dusseldorf, Germany-based Mannesmann AG was condemned by then-Finance Minister Hans Eichel, who said Germany's "consensual model" had to be protected from "Anglo-American capitalism". Last week, the state premier of Lower Saxony backed Schaeffler's offer, saying it would secure jobs as car sales fall and fuel costs surge. "Germany is lagging behind on hostile takeovers, companies are usually on friendly terms," said Kai Lucks, the Munich-based chairman of the German Federal M&A Association, which represents bankers and others who work on acquisitions. "Germany is now catching up with what's already common practice in countries such as Great Britain and the US." The combined company would overtake Stuttgart, Germany-based Robert Bosch GmbH as the world's biggest car-parts supplier. Schaeffler has entered swap transactions covering 28 percent of Continental's shares, the Herzogenaurach, Germany-based ball-bearing maker said on July 15, without providing further details. The company also holds financial instruments that give it the right to buy an additional 4.95 percent and owns 2.97 percent. Germany's financial regulator, BaFin, is investigating whether Schaeffler should have disclosed the transactions when it acquired the options. Schaeffler says it did nothing wrong. Juergen Meyer, who helps oversee 1.4 billion euros at SEB Asset Management in Frankfurt, says investors should be happy Schaeffler stepped in after Continental's shares dropped 33 percent in the past 12 months. Germany's benchmark DAX Index dropped 18 percent in the same period. "It was very easy for Schaeffler to buy this 36 percent stake in Continental because no one wanted to buy these shares anymore," said Meyer, who doesn't own Continental shares. "All the lemmings were moving in the same direction. There was one smart investor who took the other direction." Widow takes over Following the death of Georg Schaeffler in 1996, Maria-Elisabeth Schaeffler and her son, Georg F.W. Schaeffler, became the sole owners of the family auto-parts maker, then known as INA-Holding Schaeffler KG. Instead of selling the firm after her son opted to focus on his law studies, Schaeffler took an active role in managing the company and helped transform it into the world's second-biggest ball-bearing maker. In 1998, she hired Juergen Geissinger, a former senior vice-president at ITT Automotive, to run the company. Together, they succeeded in buying ball-bearing maker FAG Kugelfischer for 734 million euros in 2001. Schaeffler and her son have a fortune valued at $8.5 billion, according to Forbes magazine. Last week, Schaeffler Group offered 70.12 euros a share for Continental, the lowest allowable bid under German law. The shares fell 42 cents to 72.57 euros on Wednesday in Frankfurt. Agencies (China Daily 07/25/2008 page16) |
