Germany’s Schaeffler Mulls Multibillion-Euro IPO
Schaeffler Family Would Retain Majority Stake; Continental AG Stake Placed in Holding Company
As a precursor to the move, Schaeffler AG, the debt-laden engineering group owned by the family of the same name, has transferred its 34.2% stake in tire-supplier Continental AG into a separate holding company.
In doing so, the Schaeffler family has closed a chapter in a long-running takeover saga. Schaeffler launched a highly leveraged $18 billion takeover bid for Continental in 2008 which almost backfired as stock prices tumbled in the financial crisis, leaving Schaeffler heavily indebted.
The transfer of the Continental stake, which has a market value of €13 billion ($15 billion), took place late last year, according to regulatory filings.
The move could facilitate a Schaeffler listing because it untangles the assets owned by the company and may make it easier for investors to value the bearing business, the people said.
The Schaeffler operating company, with annual revenue of around €11 billion, supplies bearings and other precision components for making vehicle engines, transmissions and chassis’. Net external debt stood at €5.8 billion at Sept. 30.
Though Schaeffler’s owners--Maria-Elisabeth Schaeffler-Thumann and her son Georg Schaeffler --are yet to give the green light to an initial public offering, floating a minority stake in the business is a likely option, the people said. Schaeffler is yet to mandate investment banks to pursue the IPO, they said.
Schaeffler Chief Executive Klaus Rosenfeld didn’t rule out an initial public offering in comments made last week. “There are various options for the reduction of the remaining debt,” Mr. Rosenfeld said.
A Schaeffler spokesman declined to comment on the reasons for the transfer of the Continental stake to a holding company.
Schaeffler reported a small decline in net profit to €936 million in the nine months to end-September despite a 17% rise in earnings before interest and taxes to €1.22 billion on 7.1% better revenue of €9.02 billion. Continental contributed roughly half of Schaeffler’s earnings.