Wonder If Procter & Gamble Will Sponsor This One - Tire Review Magazine

Wonder If Procter & Gamble Will Sponsor This One

What is the best way to describe the ongoing, continuing, unremitting drama playing out with Continental AG and Schaeffler Group?

How about soap opera?

Now well into its ninth month, this tale has everything – the widowed uber-rich matriarch, the petulant son, oodles of dashing suitors, and more plot twists than a licorice factory. What the story doesn’t have is an end.

Yesterday we posted on this Web site the entirety of German magazine Spiegal’s revealing interview with the main players in this tale: Maria-Elisabeth Schaeffler and son Georg, who tried to portray themselves as the innocent victims of bad luck rather than the overly-ambitious Davids that may end up bankrupting a perfectly satisfactory and well-run Continental.

Their’s is a hard case to make given the circumstances, and not one easily swallowed, particularly by those who have watched this tragi-comedy unfold.

Spiegel did a far more in-depth probe of the Schaefflers than any other media has been able to muster, and it reveals some interesting takes by the drama’s main principals:

• When asked why Schaeffler is now seeking government assistance, Mrs. Schaeffler said, “Our company, like many others, has found itself in a situation for which we are not solely responsible. There was a serious change in the global economy that no one could have expected. This change is partly attributable to political reasons and partly the fault of the banks. In this sense, the government also bears some responsibility.”

Following her lead, son Georg offered, “It isn’t always objectionable for the government to help companies stay afloat and secure jobs. It is important to differentiate between the assistance benefiting a company that is fundamentally healthy and one that was already ailing before the crisis.”

Never mind that Schaeffler Group was trying to overtake a company three times its size, and did so by buying up Conti shares via third parties and banks. And much of this activity was occurring even as most observers could plainly see dark financial clouds closing in.

Later in the interview, she stated that it was Conti that first brought up the takeover idea – back in 2006. That would have been pre-Siemens VDO when Conti was considerably smaller and actively looking to add key automotive technology companies. “We concluded that it made sense,” she said. “However, we didn’t want to be purely a financial investor, but to be part of the decision-making process.”

“If the idea came from Continental, why did it perceive the takeover as hostile?” the pair were then asked.

“We assume that it was seen as hostile because we did not want to be limited to the role of financial investor,” said Georg. “Now it is seen in a much more differentiated way.”

“And that’s why you crept up and secretly secured shares before identifying yourself as the party seeking to buy up a majority of shares?” the magazine countered.

“I’m not keen on the expression ‘creep up,’” Mrs. Schaeffler offered. “Everything we did was legal. The German Federal Financial Supervisory Authority has confirmed that.”

Never mind all that. Someday this story will close, and hopefully not result in a harsh end for the tire side of Conti’s business.

As Andreas Gerstenberger, head of Continental Tire North America’s passenger tire sales and marketing, quite rightly told me recently, that while the entire situation breaks his heart, he and his team cannot waste time worrying about situation or any potential outcome. “We cannot control any of that. We need to stay focused on our customers here.”

If you have comments to share, send to me at [email protected].

– Jim Smith

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