TheChek News Flow

It offers €91 per share for car parts company spun out of supplier Continental

Germany’s billionaire Schaeffler family has made a bid to take over Vitesco Technologies as the heirs to the auto supplier seek to boost their presence in electric vehicles.

The Bavarian car parts maker Schaeffler, which is controlled by Georg Schaeffler and his mother Maria-Elisabeth Schaeffler, on Monday said it would offer €91 per share to buy Vitesco — a fifth more than its closing price on Friday — valuing the rival auto group at roughly €3bn.

Shares in Vitesco, which was spun out of supplier Continental two years ago, soared 20 per cent on the news, hitting €91 on Monday morning in Frankfurt.

The Schaefflers, one of Germany’s wealthiest families, already own 49.9 per cent of shares in EV specialist Vitesco as well as 46 per cent of Continental, which makes tyres and other car parts.

The family, which has made its money from Germany’s role as a world-leading carmaker, is uniquely exposed to the industry’s historic switch to EVs — a field in which China has quickly gained dominance.

Schaeffler last year announced it would lay off 2 per cent of its workforce, about 1,300 people, as it warned of a glut in components for combustion engines.

Klaus Rosenfeld, Schaeffler’s chief executive, said on Monday a successful takeover would mean the company would be able to offer a “full suite” of solutions both in the EV segment and for traditional combustion engine cars.

“There will be even more competition in Europe from Chinese carmakers,” he said. “Guess what, they’ll need suppliers here on the ground.”

Part of the reason behind the takeover, which Schaeffler said would by 2029 lead to synergies worth €600mn a year, was a desire to “simplify” the company’s shareholder structure, with the family giving up its control over voting shares.

“For my mother and myself as family shareholders, giving away voting rights is a decisive step that in the best interest of the company we have weighed carefully,” Georg Schaeffler said in a statement.

The combined company would have sales of roughly €25bn a year and employ 120,000 people over more than 100 production sites across the world, Schaeffler said.

Schaeffler said it was “committed” to a friendly takeover of Vitesco, which said it would “carefully evaluate all information and [ . . . ] decide on next steps”.

The chair of Vitesco’s supervisory board, Siegfried Wolf, was in June charged with money laundering by Austrian prosecutors relating to a decades-old fighter jets deal.

It is not the first time this year that Wolf, who owns 5 per cent of Vitesco and sits on the supervisory board of Schaeffler, has faced scrutiny.

The Austrian businessman, who also sits on the supervisory board of Volkswagen owner Porsche SE, this year personally wrote to Vladimir Putin, offering to help him rebuild the Russian car industry using his contacts in Germany.

VW at the time called the letter by the supervisory board member of Porsche SE “irritating” — but Wolf, who until Russia’s invasion of Ukraine sat on the board of Russian billionaire Oleg Deripaska’s carmaker Gaz, has kept all his positions in the German car industry.

Activist’s Trian Fund Management has accumulated stake worth more than $2.5 billion

Nelson Peltz is planning a fresh push for board seats at Disney DIS 2.64%increase; green up pointing triangle following a relentless slide in the entertainment giant’s shares.

The activist investor’s Trian Fund Management, now one of Disney’s largest investors with a stake worth upward of $2.5 billion, is expected to request multiple seats—including one for Peltz, according to people familiar with the matter.

If the company says no, Trian could nominate directors that would be voted on at Disney’s annual meeting next spring. The window for shareholder nominations runs from Dec. 5 through Jan. 4, according to Disney’s proxy materials.

Peltz launched a run for a seat on Disney’s board earlier this year after the company privately rebuffed his request to become a director. It was a short-lived battle, however, with Peltz withdrawing his nomination in February after Disney unveiled a broad reorganization and cost-cutting plan that sent the stock up briefly.

Since then, Disney shares have tumbled from higher than $113 to around $80, brushing up against their lowest level in a decade. In early 2021, after Disney notched several quarters of meteoric growth in sign-ups to its flagship Disney+ streaming service, its shares traded at around $200.

Disney has lately been grappling with Hollywood strikes that froze television and film production, a high-profile battle over fees with large cable operator Charter Communications and the prospect of sustained losses in its TV and streaming businesses.

Trian thinks that Disney shares are significantly undervalued today and that the company needs a board that is more focused, aligned with shareholders and accountable, people familiar with the matter said.

Trian has built up its stake in recent months to more than 30 million shares, a significant jump from the roughly 6.4 million shares it held at the end of the second quarter.

Trian, an influential activist investor co-founded by Peltz, had in its first fight been pushing Disney to plan for a successor to Chief Executive Bob Iger, who had held that role since 2005 before passing the reins to Bob Chapek in 2020. Last year, just as Peltz was kicking off his campaign, Chapek was fired by the board and Iger was brought back. Iger recently agreed to stay in his position through 2026.

Trian also argued that Disney had excessive compensation and lacked expense discipline.

Disney at the time said it continually refreshes its board, with a focus on directors with industry experience, and argued that Peltz didn’t understand the media industry. The company also launched a succession-planning committee to advise on Iger’s replacement.

When Peltz called off his fight with Disney in February, he told The Wall Street Journal that Iger needed to execute on his promises.

Iger has been taking steps to reverse the stock decline, some geared toward achieving profitability for Disney’s streaming segment by September of next year, a target set forth in late 2020. In August, the company unveiled a round of major price increases for its streaming products, raising the cost of the ad-free versions of Disney+ and Hulu by more than 20% each.

The company has also said recently that a plan to restore its cash dividend by the end of 2023 was on track. The payout was eliminated during the Covid-19 pandemic.

And Disney last month vowed to spend about $60 billion to expand its theme parks, cruise lines and resorts over the next decade, almost doubling its investment in a division that provides its primary source of profits.

In July, Iger said that Disney’s traditional cable and network television assets, which include ABC, sports network ESPN, FX, the Disney Channel and others, “may not be core,” indicating that the networks might be for sale. He said that ESPN would seek an investment from a strategic partner.

Two months later, Disney announced that it was partnering with gambling company Penn Entertainment to launch ESPN Bet, a sports-wagering app. Neither move caused more than a brief increase in the share price, and Disney’s 2½-year stock decline accelerated through the end of the summer.

Meanwhile, Disney is in the midst of exploring strategic options for its Star India business, whose fortunes have soured in recent months after losing a key bidding war, the Journal previously reported.

Trian, like other activists, is known for encouraging changes at the companies it targets such as a breakup or the sale of underperforming divisions or moves to improve efficiency and better use capital.

Peltz has previously served on the boards of other consumer-facing companies including Oreo maker Mondelez International, Kraft Heinz and, more recently, Unilever, the maker of Dove soap and Hellmann’s mayonnaise.

Chanel increased prices of its high-end products in China in September, amid a slowdown in demand for luxury goods worldwide after the post-pandemic boom years.

The company also raised prices in Taiwan, Thailand, Malaysia, Australia and Japan, a spokesperson for the luxury brand said, citing fluctuations in exchange rates. Overall, prices have risen between 6 percent and 8 percent.

“This is something we regularly do, in line with our commitments made in terms of price harmonisation,” the representative said in an emailed statement. A classic medium-sized flap bag currently costs 80,500 yuan in China ($11,030), while it sells for €9,700 in France ($10,230).

Exclusive luxury brands are known to enjoy strong pricing power, meaning they can apply increases without necessarily losing customers. But in the past year there have been more signs that so-called aspirational customers buying entry-level products have curbed their spending.

Chanel reviews prices of its handbags twice a year, in March and September, the brand’s Chief Financial Officer Philippe Blondiaux said in an interview with Bloomberg in May. Chanel also carries out price increases in line with input-cost inflation, he added.

A post-pandemic economic slowdown and a slumping youth jobs market has rattled China and confidence among consumers, weighing on shares of luxury groups such as Cartier owner Richemont and LVMH Moet Hennessy Louis Vuitton SE. The Christian Dior parent company will be the first luxury group to report third-quarter sales on Oct. 10.

The conflict has fuelled concerns of wider uncertainty in the Middle East

Crude prices surged to as high as $89 a barrel on Monday over concerns that Hamas’s attack on Israel will increase tension across the Middle East and affect output from leading oil producers.

Brent crude, the international oil benchmark, jumped as much as 5.2 per cent in early trading in Asia before pulling back to be up 3.7 per cent at $87.69.

Israel is not an oil producer, but there are concerns the conflict could trigger wider uncertainty in the region and lead to tougher enforcement of sanctions on oil from Iran, whose foreign ministry backed Hamas’s actions as an act of self defence.

The conflict could also complicate efforts by the Biden administration to broker a deal with Saudi Arabia to normalise ties with Israel, which could also affect the kingdom’s willingness to raise its oil output.

“The Israeli government is vowing an unprecedented response and it is hard to envision how Saudi normalisation talks can run on a parallel track to a ferocious military counteroffensive,” said Helima Croft, head of global commodity strategy at RBC Capital Markets.

The White House has adopted a “soft approach” to enforcing sanctions on Iranian oil production, she added, but this would be “difficult” to maintain if Israel accuses Tehran of providing support to Hamas.

Pierre Andurand, a hedge fund manager that specialises in energy trading, said while there was little immediate threat to supplies, the market could tighten.

“Over the past six months we have seen a very large increase in Iranian supply due to weak enforcement of sanctions,” he wrote on social media site X, formerly Twitter. “There is a good probability that the US administration will start enforcing those sanctions on Iranian oil exports more tightly.”

The gains followed a report in The Wall Street Journal citing claims from senior members of Hamas that officers of Iran’s Islamic Revolutionary Guard had helped plan the militant group’s surprise attack on Israel. Iran’s foreign ministry backed Hamas’s actions as an act of self-defence.

US officials have yet to confirm any such connection, and on Sunday US secretary of state Antony Blinken told CNN that “we have not yet seen evidence that Iran directed or was behind this particular attack”.

“Our point of concern is very much around oil supply and exports out of Iran,” said Vivek Dhar, mining and energy commodities analyst at Commonwealth Bank of Australia.

Dhar said that US confirmation of the Revolutionary Guard’s involvement in the attack would spur more vigorous enforcement of existing sanctions on Iran, which have been weakly enforced this year due to concerns about high fuel prices. That could push Brent above $100 a barrel, he added.

“If we do see blame assigned by the US to Iran for this we could see a lot of this year’s increase in Iran’s oil experts reversed,” Dhar said. “The impact on the market would be about 0.5 to 1 per cent of global supply — that is sizeable.”

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