Schaeffler to End Investment Pact with Continental
Precision bearings maker Schaeffler AG, which owns 49.9% of Hanover, Germany-based Continental AG, says it will terminate their investment agreement in May 2014.
Privately held Schaeffler signed the pact in August 2008 after its failed attempt to take over the tire and auto parts supplier. The companies say the deal has become mostly irrelevant because its major provisions expired after four years.
Under the 2008 agreement, Schaeffler promised to keep its direct ownership of Conti below 50% and refrain from pressuring the company to sell some operations.
Schaeffler has struggled since then under the burden of the more than €10 billion it borrowed to buy a 90% stake in Conti, which included a 40.1% indirect holding of stock parked with several banks. Schaeffler has since shrunk its Conti ownership by selling shares to reduce debt.
Schaeffler says its remaining stake is a long-term strategic investment and that the companies aim to continue their "goal-oriented" cooperation. Conti said earlier this year that the duo is collaborating on about 30 projects.
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