By Adria Calatayud
Schaeffler is making an offer to buy all Vitesco Technologies Group’s shares in a bid that values the target at 3.64 billion euros ($3.85 billion) and seeks a combination of two of Germany’s largest auto suppliers.
Schaeffler said Monday that its offer is intended as a first of three steps toward a merger of the two companies, which are both controlled by IHO Holding. The move would result in the creation of a group with combined annual sales of EUR25 billion, Schaeffler said.
Schaeffler said it is committed to enter into talks with Vitesco about a friendly business combination.
Vitesco didn’t immediately respond to a request for comment.
Schaeffler said it has entered into an agreement with IHO Holding–the holding company of the Schaeffler family–for its 49.9% stake in Vitesco. Under the agreement, IHO has committed not to accept Schaeffler’s offer for Vitesco or sell its shares to third parties until a certain date and to coordinate closely on decisions concerning Vitesco, Schaeffler said.
The bid offers EUR91 a Vitesco share in cash, a 21% premium to Vitesco’s closing price of EUR75.35 on Friday.
Schaeffler has arranged a comprehensive financing package to fund the offer, it said.
Schaeffler’s tender offer, which won’t be subject to a minimum acceptance threshold, is expected to remain open to Vitesco shareholders until mid-December and to be closed in January, it said.
Following completion of the tender offer, Schaeffler plans to convert its nonvoting shares into common shares with full voting rights, it said.
The merger would then be put to vote by shareholders of both companies and the ownership ratio would be defined ahead of the shareholder meetings, Schaeffler said.
The overall transaction is expected to be completed in the fourth quarter of 2024, Schaeffler said.
Schaeffler said it sees a compelling strategic logic for a combination with Vitesco, given that both companies have complementary technology portfolios and joining forces would improve competitiveness, especially in electrification.
The bidder said it sees potential for EUR600 million in annual revenue and cost synergies at the earnings-before-interest-and-taxes level, to be achieved fully in 2029, but estimates one-off integration costs would amount to up to EUR665 million.
Write to Adria Calatayud at [email protected]
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