Continental Unaware About Schaeffler’s Decision to End 5-Year Agreement image

Continental said it did not know about Schaeffler’s decision to end a 5-year-old investment agreement.

Schaeffler, the maker of transmission parts and industrial bearings, said it will end a 2008 deal which limited its stake in Continental to 49.99%, to solve a past row over the company’s control. Continental said it hopes the cooperation with Schaeffler will continue even without this deal.

“A joint termination (of the accord) was not discussed,” said Continental CEO Elmar Degenhart. “We have no information about the future development of the Schaeffler holding or other plans by the company.”

Analysts predict that once the 2008 accord ended Schaeffler might try to reduce its stake in Continental. Although Schaeffler has reduced its stake in Continental from almost 90%, the company still has 10.3 billion euro in overall debt.

“We consider our investment in Continental a long-term strategic investment aimed at sustainably increasing the value of Continental AG,” Schaeffler said on Monday.

Two months ago Continental said it expects 2014 to bring a growth in sales if economy doesn’t deteriorate. Continental kept its target for 2013 even if the auto market in Europe declined more than the analysts’ predictions for the first quarter. The company expects sales to increase 5% in 2013 and plans to reach adjusted earnings before interest and taxes of more than 10% of revenue.

Source: Autonews