A $3.8bn deal points to the future of car-parts suppliers
“It’s a good deal,” beams Klaus Rosenfeld, chief executive of Schaeffler, a maker of car parts based in Herzogenaurach, Bavaria. In the small hours of October 9th he called Andreas Wolf, his counterpart at Vitesco, a Bavarian rival, to offer to buy the 50.1% of the firm Schaeffler did not already own. The €3.6bn ($3.8bn) transaction, says Mr Rosenfeld, will create a competitive German giant in an industry undergoing a huge shift to electric cars.
Schaeffler last attempted a big takeover in 2008, when it won a controlling stake in Continental, a rival then three times its size. That deal, financed entirely by debt, almost sank the family-owned business. This time the transaction is smaller—Vitesco, which was itself spun off from Continental in 2021, has annual sales of €9bn, compared with €16bn for Schaeffler. The merger also relies less on borrowed money. And Mr Rosenfeld, who became Schaeffler’s boss in 2014 and took the company public a year later, is a banker by training and cautious by temperament.
The acquisition is expected to produce cost savings of around €500m a year. It will also simplify Schaeffler’s shareholder structure, increase its transparency and make Schaeffler shares easier to trade. As part of the deal the Schaeffler family has agreed to give up its monopoly on voting shares (though it will remain firmly in control, with a 75% stake in the new firm). Most important, the transaction will create a global car-parts behemoth, with 120,000 staff worldwide.
2023-10-12 09:04:45
Article from www.economist.com
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