Scheffler in Germany is aiming to buy Vitesco Technologies alongside its former parent Continental to form a massive global Tier One automotive supplier

The family fund that owns Schaeffler also owns Continental and is a major shareholder in the powertrain spinout Vitesco. Schaeffler has now made a friendly bid to acquire the rest of Vitesco to simplify its ownership structure.

“Both companies share a technology and innovation-driven mindset, focus strongly on sustainability, are headquartered in Bavaria, and have IHO Holding as joint shareholder. In order to ensure a mutually beneficial transaction, Schaeffler is committed to enter into talks with Vitesco about a friendly business combination,” said the company.

The combined company will have sales of €25bn with 120,000 people in 44 R&D centres and more than 100 production sites.

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The public tender offer for all outstanding shares of Vitesco Technologies Group AG at €91 is a premium of around 20 percent on the 3-month volume-weighted average share price and values the company at $3.8bn.

A three-step transaction would see the merger of Vitesco into Schaeffler and a simplified shareholding structure. This would provide cost savings of €600m a year by 2029 says the company.

This would create what Schaeffler calls a ‘Motion Technology Company’ with four focused divisions.

The E-Mobility Division will combine the highly complementary assets and capabilities of Schaeffler and Vitesco with the ambition to create a market leader in e-mobility with an order book of around €40bn

The Powertrain & Chassis Division will include both partners’ mature businesses and will be a market leader in conventional powertrain plus chassis.

The Vehicle Lifetime Solutions Division will combine Vitesco’s Automotive Aftermarket activities with Schaeffler’s existing aftermarket platform, creating an integrated platform player.

The Bearings & Industrial Solutions Division will consist of Schaeffler’s current Industrial Division and its Automotive Bearings business, with the ambition to build the leading global Bearings & Industrial Solutions company operating in four market clusters.

“With the launch of the tender offer today, we are initiating a transformative move for Schaeffler. By combining Schaeffler and Vitesco, we will build a leading Motion Technology Company with four focused ‘pure-play’ divisions, a balanced well-diversified portfolio, and critical scale across its businesses,” said Klaus Rosenfeld, CEO of Schaeffler.

“This includes a best-in-class e-mobility champion with significant growth potential. The combination will make Schaeffler and Vitesco stronger together and is beneficial for customers, employees, shareholders and business partners.”

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Vitesco was spun out of Continental in 2021 with a share price of €59.80. IHO Holding is the strategic management holding of the Schaeffler family and already owns 49.9 percent of Vitesco and Continental.

Schaeffler expects the tender offer to be closed in January 2024 with the completion of the overall transaction is expected to take place in the fourth quarter of 2024. As IHO Holding already owns a controlling stake in Schaeffler and Vitesco, no merger control clearance is necessary for the completion of the transaction in the EU and almost all other jurisdictions.