Schaeffler acquires close to 80 per cent of Vitesco shares

Schaeffler announced its intention to take over drive manufacturer Vitesco back in October. In November, the matter became concrete: both sides signed an agreement on the planned merger. Vitesco shareholders were then presented with an improved offer (94 instead of 91 euros per Vitesco share), which they had until mid-December to accept. The offer period has now expired – and Schaeffler announced that it has acquired a further 30 per cent of Vitesco shares.

Schaeffler’s holding company IHO already owns just under 50 per cent of the Vitesco shares. In total, Schaeffler will have 79.82 per cent of the share capital and voting rights in Vitesco following the completion of the acquisition offer planned for 5 January 2024. Incidentally, for shareholders who had invested in Vitesco since the spin-off from Continental AG, the Schaeffler offer represented a premium of 57.2 per cent on the initial Vitesco share price of EUR 59.80 on 16 September 2021.

It is already clear that Vitesco will become part of Schaeffler AG, based in Herzogenaurach. An “integration committee with equal representation” will manage the integration process – it comprises the CEOs, CFOs and HR directors of Schaeffler and Vitesco. “Led by the integration committee, both parties will prepare a joint business plan for the combined company by mid-2024 the latest,” says Schaeffler. The combined company will offer a seamless product portfolio, particularly in the field of electrification, and thus exploit the accelerated growth potential of electric mobility.

It has also been agreed that the EV division will be headed by Thomas Stierle, who has been in charge of the Vitesco Electrification division to date. The personnel decision is important for the course of the division. Stierle will also be a member of the future nine-member Group Executive Board. In addition to Schaeffler CEO Klaus Rosenfeld, the four “functional board members”, CFO, CHRO, CTO and COO, and the CEOs of the four divisions also sit on the board.

“We are very pleased with the result of the tender offer. From 5 January 2024, Schaeffler AG will hold a stake of around 30 percent in Vitesco Technologies Group AG. That is a little more than we expected and a very good foundation as we proceed with the transaction as planned,” commented Klaus Rosenfeld, CEO of Schaeffler AG.

According to Rosenfeld, the acquisition offer was the first step of a three-stage overall transaction. The second step is the vote on the standardisation of Schaeffler’s share classes. To this end, the company invites shareholders to an Extraordinary General Meeting and a separate meeting of preference shareholders in Herzogenaurach on 2 February 2024. “Shareholders will be allowed to vote in presence on the intended conversion of the non-voting common shares into common shares with full voting rights, which should become effective at the same time as the merger,” Schaeffler says in its statement to the press.

According to Rosenfeld, the conversion offer will bring significant advantages for the holders of preference shares: All shareholders of Schaeffler AG will be entitled to vote after the conversion, which means that the principle of “one share, one vote” will apply in the future. “Schaeffler is thus fulfilling the repeatedly expressed request by capital markets for greater participation in the company,” the company states.

The third step in the overall transaction is the merger of the two companies. That requires the approval of the Annual General Meetings of both companies, expected to take place on 24 April 2024 (Vitesco) and 25 April 2024 (Schaeffler). The merger will be officially completed in the fourth quarter of 2024.

Meanwhile, Schaeffler intends the free float for the combined company to reach about 30 per cent. Moreover, it says that the combined company will have pro forma annual sales of around 25 billion euros and employ more than 120,000 people. Schaeffler continues to expect the merger to offer significant synergy potential with an expected EBIT effect of 600 million euros annually, which is expected to be fully achieved in 2029.

Update 14 March 2024

Schaeffler’s takeover of Vitesco is one step closer to being a done deal.
With the approval of the respective supervisory boards, both companies have concluded an agreement that sets out the legally binding terms of the merger of Vitesco Technologies Group into Schaeffler AG. The effectiveness of the merger agreement still requires the approval of the annual general meetings of both companies, which are scheduled for 24 April 2024 (Vitesco) and 25 April 2024 (Schaeffler), as well as the subsequent entry in the respective commercial registers. The transaction is still expected to be completed in the fourth quarter of 2024.

The previously published preliminary exchange ratio of 5 to 57 has been bindingly confirmed in the signed agreement. To that end, Vitesco Technologies shareholders will receive 11.4 Schaeffler shares for one Vitesco Technologies share. According to the current announcement, “the appropriateness of the exchange ratio was confirmed by a joint valuation expert and the court-appointed merger auditor.”

“The signing of the merger agreement marks another important milestone in the implementation of the transaction. Furthermore, preparations for the integration of Vitesco into Schaeffler are making good progress,” says Schaeffler CEO Klaus Rosenfeld. “We are confident that we will complete the transaction as planned in the fourth quarter and successfully realize our plan to establish a leading Motion Technology Company together with Vitesco in the best interest of our customers, shareholders, and employees.”

schaeffler.com, schaeffler.com, vitesco-technologies.com (both update)