Schaeffler’s (SHA_p.DE) token bump for Vitesco Technologies (VTSCn.DE) may not ensure a smooth ride. The 3.4 billion euro German industrial group raised its tender price for shares in auto parts group Vitesco by 3% to 94 euros. But it’s unlikely to appease some rebel shareholders.
Schaeffler only needs to lock in a small number of shares to get the first part of its deal over the line. Since the Schaeffler family owns 49% of 3.7 billion euro Vitesco, and will back the combination, it only needs a 75% block to push through the combination at a shareholder meeting. While Vitesco’s board has approved the deal, which gives its executive Thomas Stierle control of the combined auto division, it has also said the tender price is inadequate. With reason: analysts' estimates compiled by the company on average deem Vitesco to be worth 87.7 euros. On that basis the 94 euros tender price is only a 7% premium above fair value.
Assuming enough shareholders now tender, the final merger price for any remaining shares will be set by a third-party valuer. Yet Vitesco’s board, backed by three banks including JPMorgan (JPM.N) and Lazard (LAZ.N), have now published fairness opinions saying the company is worth more than 94 euros. Shareholders, which include David Einhorn’s Greenlight Capital, have more reason to push for a higher price. (By Neil Unmack)
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