Schaeffler repeats aim for over 30 pct of Continental

Tag : Blue World
Germany - (Adds quotes, background)
FRANKFURT, July 20 (Reuters) - The little known family businessbehind what may be Europe's biggest takeover this year vowed onSunday not to settle for the 20 percent stake offered by its prey-- German tyre-to-brakes maker Continental AG (other-otc: CTTAY.PK - news - people ).
German ball-bearings maker Schaeffler's out-of-the-blue $18 billiontakeover bid for three-times-bigger Continental could create anautomotive supplier rival to world No. 2 Robert Bosch , also ofGermany, if successful.
Taken completely by surprise by Schaeffler, which managed tocircumvent rules requiring investors to flag stakes exceeding orfalling below certain levels starting at 3 percent, Continentalsaid it would welcome a Schaeffler holding of up to 20 percent.
Continental Chief Executive Manfred Wennemer -- no stranger totakeovers himself, having acquired high-tech electronics units tocomplement the formerly tyres-only business -- called in weekendnewspaper interviews for Schaeffler to engage in talks to reach anamicable solution.
Schaeffler, in a statement on Sunday, welcomed Continental'sreadiness to negotiate but did not back down from its position.
"The objective pursued by Schaeffler to be a strategic majorshareholder in Continental and to acquire for that purpose morethan 30 percent of the shares remains unchanged," it said.
"This strategic participation is necessary to achieve a stableshareholder structure at Continental that will enable us toimplement our targets and thereby secure our investment in thecompany for the longer term," Schaeffler said.
The statement did not say what those targets are.

NO BREAK-UP
Schaeffler said the 20 percent stake proposed by Wennemer would notbe strategic but a pure financial investment which the familybusiness could not justify,
Schaeffler reiterated its approach was not intended to lead to abreak-up of Continental. The 69.37-euros-per-share offer wasappropriate, Schaeffler said, adding it expected Continentalshareholders to find it interesting.
Continental's share closed at 71.97 euros in Frankfurt on Friday --valuing the group's equity at 11.5 billion euros ($18.3 billion) --having traded between 64.10 and 75.55 euros since news ofSchaeffler's approach broke a week ago.
Wennemer is expected to unveil his defence against Schaeffler at ameeting of Continental's supervisory board on Wednesday.
It remains unclear whether he has the support of board chairmanHubertus von Gruenberg who has worked with Schaeffler boss JuergenGeissinger. A Continental source told Reuters on Thursday that vonGruenberg saw little hope of the group defending itselfsuccessfully against Schaeffler.
The weekend edition of the Financial Times reported a "massivesplit" at the top of Continental.
A Schaeffler takeover of Continental would mark the first time aGerman family business has acquired a company in Frankfurt'sblue-chip DAX stock market index. (Reporting by Peter Starck;Editing by Richard Hubbard) Copyright 2008 Reuters, Click for Restriction
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