Shares in Vitesco Technologies Group surged following an acquisition offer made by their peer, Schaeffler. The proposal aims to merge two of Germany’s largest auto suppliers in preparation for the industry’s transition to electric mobility.
At 09:54 GMT on Monday, Vitesco shares traded 21% higher at EUR91, matching the price offered by Schaeffler. On the other hand, Schaeffler’s shares declined by 6.5% to EUR5.10. Rival auto suppliers such as Continental, Valeo, and Forvia also experienced a drop in their stock prices.
Schaeffler’s offer values Vitesco at 3.64 billion euros ($3.85 billion) and intends to establish a group with a combined annual sales of EUR25 billion. Both companies are under the control of IHO Holdings, which has reached an agreement with Schaeffler to collaborate on significant decisions concerning Vitesco.
Vitesco has confirmed receipt of the offer and its management and supervisory boards will carefully assess the proposition before determining the next course of action.
“The boards of Vitesco Technologies will thoroughly evaluate all information and make informed decisions regarding our next steps,” stated the company in a brief announcement.
Schaeffler Announces Tender Offer for Merger with Vitesco
Step 1: Tender Offer
The first stage of the merger entails a tender offer presented by Schaeffler to Vitesco shareholders. This offer allows shareholders to either immediately tender their holdings or retain them until the proposed merger occurs. By providing shareholders with flexibility, Schaeffler aims to ensure a seamless transition while considering their individual preferences.
Step 2: Conversion of Nonvoting Shares
Following the successful completion of the tender offer, Schaeffler intends to convert its own nonvoting shares into shares with voting rights. This strategic move aims to consolidate control and strengthen decision-making capabilities within the merged entity.
Step 3: Shareholder Meetings
In order to finalize the proposed merger, both companies will convene shareholder meetings. These meetings will serve as a platform for discussions and voting on the merger proposal. By involving shareholders in this decision-making process, Schaeffler demonstrates its commitment to transparency and inclusive governance.
Smooth Regulatory Process
Schaeffler highlights that no merger control clearance is required for this transaction in the European Union and nearly all other jurisdictions. This efficient regulatory process further expedites the completion of the merger and minimizes potential obstacles.
Schaeffler projects that the entire transaction will be concluded by the fourth quarter of 2024. With a clear timeline in place, the company aims to ensure a structured and timely integration of operations.
Noted industry analyst Marc-Rene Tonn from Warburg emphasizes the industrial logic behind this merger. Combining Vitesco’s electronics expertise with Schaeffler’s mechanical prowess creates a powerful synergy. Tonn also highlights that Vitesco’s impressive order book, boasting approximately EUR30 billion in the electric-mobility sector, lays a solid foundation for future growth.
In conclusion, Schaeffler’s tender offer to merge with Vitesco marks the beginning of an exciting journey towards enhanced industry leadership. By carefully orchestrating a series of strategic steps, Schaeffler aims to create a formidable powerhouse in the automotive and industrial sectors.