Schaeffler Verwaltungs GmbH, holding company of automotive and industrial supplier Schaeffler AG, Tuesday said it sold 20.8 million shares of Continental AG (CTTAY.PK), raising 1.6 billion euros ($2.07 billion), thus improving its credit structure and financing conditions. Continental shares are trading lower by over 4 percent.
Schaeffler, which had made an offer for the German tire maker in 2008, found itself holding more than the required shares after investors hurriedly sold off their shares in the wake of the Lehman bankruptcy.
While Schaeffler wanted 49.9 percent of Continental shares, the company received more than 90 percent and its debt also piled up. As per an agreement with Continental, Schaeffler parked the remaining shares that it did not actually want with two private banks - M.M. Warburg and Bankhaus Metzler.
M.M.Warburg & CO and Bankhaus Metzler has now sold their entire remaining stakes to international investors. The shares were placed at a price of 77.50 euros per share. The sale will see Schaeffler reducing its debt from around 5.1 billion euros to about 3.5 billion euros.
Following the placement, the free float in shares of Continental AG will increase from 39.7 percent to 50.1 percent. With 49.9 percent of the capital, Schaeffler will remain the largest shareholder in Continental.
With the conclusion of the deal, the contractual agreements between M.M.Warburg & CO, Bankhaus Metzler and Schaeffler Verwaltungs GmbH have been terminated.
Klaus Rosenfeld, Chief Financial Officer of Schaeffler Holding, said, "As a result of the transaction, Schaeffler Holding's capital structure has improved further. With the termination of the agreements with M.M.Warburg & CO and Bankhaus Metzler, we could further reduce complexity in the participation structure."
Continental shares are falling 4.53 percent at 77.80 euros on the Xetra in Frankfurt.
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