Schaeffler has announced its intention to merge with Vitesco, aiming to establish a formidable presence in the electric vehicle market. This move is part of the Schaeffler family's efforts to streamline their business empire, which includes stakes in Vitesco and Continental.

Both Schaeffler and Vitesco possess similar e-mobility technology portfolios. While Vitesco primarily deals in combustion-engine components, it has recently secured significant orders for its electric-drive division. Schaeffler, on the other hand, is navigating the transition to electric motors.

The billionaire Schaeffler family is restructuring its industrial holdings to align with the accelerating shift toward electric vehicles. The merger will create a leading motion technology company with four focused divisions and estimated revenue of around 25 billion euros.

The deal is anticipated to generate 600 million euros in "sales and cost synergies" by 2029. Schaeffler's mechanical expertise will be combined with Vitesco's power electronics capabilities, according to Schaeffler CEO Klaus Rosenfeld.

Although the offer was not discussed with Vitesco in advance due to overlaps in supervisory boards, Schaeffler is confident about a "friendly merger." Vitesco has acknowledged the offer and will decide on its next steps.

Schaeffler plans to finance approximately 1.8 billion euros of the offer, with debt levels expected to decrease from the next year onward. The merged company will have the Schaeffler family's holding firm as a joint shareholder and will employ over 120,000 people.

As part of simplifying its shareholder structure, Schaeffler will convert its free-floating non-voting preference shares into common stock with voting rights. This move aims to facilitate the company's inclusion in Germany's MDAX Index.

The Schaeffler family, one of Germany's wealthiest, has agreed to eventually sell its Vitesco shares to Schaeffler. The family's combined wealth is estimated at 7.8 billion euros. Schaeffler is offering 91 euros ($96.02) per share in cash, representing a 21% premium over Friday's closing price. The tender offer is expected to conclude in January 2024.

This merger with Vitesco might signal further reshaping of Schaeffler's industrial holdings. Continental CEO Nikolai Setzer has expressed openness to selling businesses if it creates value. Schaeffler is also considering divesting parts of ContiTech, a smaller unit that manufactures car parts, including drive belts and engine pulleys. Schaeffler is currently ranked No. 28 on Automotive News Europe's 2023 list of the world's top 100 suppliers, with annual parts sales to automakers totalling $10.20 billion in 2022.

Source: europe.autonews.com