Mergers, Acquisitions and Takeovers Case Study

Schaeffler Group’s Bold Bid for Continental AG: Is it Wise?

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Abstract:
In 2007, the privately owned Schaeffler Group based in Germany, was the world's second-largest manufacturer of ball bearings. In order to become the world leader in the automotive components industry, on 15 July 2008, Schaeffler launched a bid to acquire publicly-held Continental AG, the world's fifth-largest automotive components supplier. After fiercely opposing the bid, Continental ultimately accepted Schaeffler's offer, but compelled Schaeffler to sign an investment agreement which was largely in its favour. Schaeffler's bid was a bold move, considering the fact that it was nearly three times smaller than Continental. Also, financing the acquisition and taking over Continental's businesses during times of severe globa,l financial and economic crises was a big challenge. The case focuses on Schaeffler's ambitious growth plan and brings forth the problems faced by the global automotive components industry.

Pedagogical Objectives:

• To understand the dynamics of the automotive components industry.
• To explore the growth of Schaeffler as a formidable competitor in the global automotive components industry.
• To to study the probable impact of the acquisition on the Romanian banking sector.
• To analyse Continental's business and the factors that were responsible for its acquisition.
• To explore the rationale behind Schaeffler's strategy of acquiring a bigger company for growth, and discuss the probability of its success.

Keywords : Schaeffler Group, Continental AG, Acquisition, Automotive components industry, Maria Schaeffler, Swap transactions, Siemens VDO, Tyre industry, Investment agreement, Ball bearings, Automotive electronics, FAG, Wennemer, Powertrain

Contents : 
Schaeffler KG
Schaeffler Group – Product Overview
Continental AG
Continental’s Internationalisation Strategy
The Global Top Five Tire Manufacturers, 1990
World Automotive Supplier Market
Schaeffler’s Takeover of Continental
Key INA Developments, 1970–1995