The board of giant German tire maker Continental rejected Wednesday an 11.3 billion euro ($18 billion) takeover bid launched by bearings manufacturer Schaeffler, but called for talks with the family-owned company.
Continental execs said they're open to talks with Schaeffler
Following a crisis meeting of the company's board, Hanover-based Continental said Schaeffler's offer price of 70.12 euros ($110.46) a share was not appropriate.
But Continental said it would now seek out talks with the Bavarian-based Schaeffler group, which is owned by billionaire Maria-Elisabeth Schaeffler and her son.
While rejecting Schaeffler's current offer as too low, Continental brass said in a statement that "an agreement with Schaeffler Group is desirable."
"In the case that Schaeffler Group shows willingness to negotiate about either an adequate premium for Continental shareholders or the willingness to limit their targeted stake to an acceptable level for Continental, the supervisory board has given the executive board its consent to enter into direct negotiations with Schaeffler Group," Continental said.
Last week the chief of Europe's biggest carmaker, Volkswagen, lent his support to a merger between Schaeffler and Continental, which is also a leading manufacturer of braking systems.
Martin Winterkorn said a merger between the two companies would be "altogether positive."
Schaeffler this week raised its bid to 70.12 euros per share after being advised by German financial market regulator BaFin that it must offer at least the three-month average of Continental's share price.
A Schaeffler offer last week of 69.37 euros was disparaged by Continental management as not reflecting the group's full value.
Continental is nearly three times the size of the Schaeffler Group.
However, a slump in the car industry combined with an 11 billion euro acquisition last year has helped to drive down Continental's shares, leaving the group exposed to takeover.
Schaeffler said last week it had secured the rights to about 36 percent of Continental's shares. If Schaeffler's offer succeeds, the two companies will have a combined turnover of about $33 billion.