David Einhorn urges Vitesco to reject offer from rival German auto group Schaeffler

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Hedge fund manager David Einhorn has urged Vitesco Technologies to reject a takeover bid by rival German automotive supplier Schaeffler, warning the electric vehicle specialist against merging with a company that is still heavily dependent on combustion engine cars.

Einhorn’s Greenlight Capital, which owns 3.5 per cent of Vitesco, on Monday sent a letter to the Regensburg-based company, calling on its board to reject Schaeffler’s €91-per-share offer and “not to give it up at depressed prices to competitors who have missed the boat”.

The intervention for the deal, which places Vitesco’s enterprise value at €3bn, will complicate plans of the billionaire Schaeffler family, which through its eponymous automotive supplier last month made an all-share offer to take over the smaller Vitesco.

The Schaefflers, one of Germany’s richest families whose wealth has been built on the country’s car industry, already own 49.9 per cent of Vitesco as well as 46 per cent of tyre specialist Continental, from which Vitesco was spun out two years ago.

Greenlight’s letter stated that Vitesco should not accept any offer below a “conservative valuation” of €150 per share, making it the second shareholder to publicly express discontent with Schaeffler’s offer. It follows a letter from asset manager Ninety One, which owns about 6 per cent of Vitesco, three weeks ago which said the proposed deal risked “disadvantaging” minority shareholders.

Schaeffler last month said a deal would lead to €600mn a year in synergies by 2029, while it warned that “there will be even more competition in Europe from Chinese carmakers”. Combined, the two companies would have sales of roughly €25bn a year and employ 120,000 people over more than 100 production sites across the world.

Schaeffler declined to comment on Greenlight’s letter, while Vitesco said it had noted “concerns” among shareholders and employee representatives.

Greenlight on Monday laid out alternative deals that the company could strike, including selling its legacy power-train business to Schaeffler, which it said could “achieve many of the synergies Schaeffler had outlined for those operations”.