Schaeffler Said to Consider Initial Share Sale Next Year

Schaeffler AG, the family-owned industrial bearing maker that’s the biggest investor in Continental AG, is exploring an initial public offering next year in Germany, three people familiar with the matter said.

The Herzogenaurach, Germany-based company is discussing options that include a share sale, said the people, who asked not to be identified because the deliberations are private. Another option would be bringing in a large investor as an owner alongside the family, one of the people said.

The talks are at a very early stage and no decision has been made, they said. “This is pure speculation and we don’t comment on it,” said Marcus Brans, a Schaeffler spokesman.

Schaeffler’s revenue last year increased 4 percent to 11.1 billion euros ($14.5 billion), led by 7.1 percent growth at the automotive division. Earnings before interest and taxes fell 16 percent to 1.41 billion euros. Chief Financial Officer Klaus Rosenfeld said last month the company would comment “once we’re ready,” when asked about opening up Schaeffler for investors outside the family.

“An IPO makes a lot of sense, if Schaeffler wants to keep its Continental stake,” Hans-Peter Wodniok, an analyst at Fairesearch GmbH in Kronberg, Germany, said in a phone interview. “Schaeffler would get money to reduce its debt and still keep the major influence over the company.”

Schaeffler offered to buy Hanover, Germany-based Continental in July 2008, two months before the collapse of Lehman Brothers Holdings Co. The manufacturer’s plan only to seek a 49.99 percent stake backfired when more investors than it expected accepted the bid as markets tanked in the global credit crunch.

Lowering Debt

Following the bid and Continental’s earlier purchase of Siemens AG’s VDO car-parts division, combined debt totaled 22 billion euros.

Net debt at Schaeffler narrowed to 6.8 billion euros at the end of 2012 from 7.1 billion euros a year earlier. Continental, Europe’s second-largest maker of auto parts, said in March that net debt was reduced almost 22 percent to 5.3 billion euros last year.

The manufacturer raised 1.25 billion euros in a high-yield bond sale this week. Proceeds from the oversubscribed offering are being used to reduce bank debt and improve credit terms.

Closely held Schaeffler, whose roller-bearings are used in the London Eye Ferris wheel and Airbus SAS’s double-decker A380 airliner, now owns 49.9 percent of Continental after gradually reducing the holding from more than 90 percent.

The most recent disposal was a 10 percent stake sold in September that raised the amount of freely traded stock, supporting Continental’s return to Germany’s benchmark DAX Index after a 45-month absence.