Schaeffler delays merger with Conti unit

Automotive News report (AN)

Frankfurt - Indebted German car parts group Schaeffler has put plans to merge its auto parts business with that of larger rival Continental on hold to deal with more pressing problems, a German daily reported.

Ball bearings maker Schaeffler has enough on its plate to deal with because of the amount of its debt, German daily newspaper Handelsblatt reported today.

"If synergies can be had without a major merger, then it would not put a strain on the organization," the paper quoted an unnamed source as saying.

A Schaeffler spokesman said the two companies were still working on combining their auto parts divisions.

"We will continue to work on a merger of the automotive businesses and are confident that it will be very cooperative and progress without interruptions. But it is surely not a process that will be completed in the next months," the spokesman said.

Last July, Schaeffler borrowed Euro 16 000 million ($20 billion) to get control of Continental, but the deal backfired when the recession squeezed Schaeffler's earnings and its ability to pay interest on its debt.

Schaeffler has a direct stake of nearly 50 percent in Continental and transferred another 40 percent stake to banks to ensure it stays a minority shareholder under a deal it struck last year to end a bitter takeover fight.

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Original article from Automotive News Europe (a Crain publication)