Schaeffler Owners Holding Talks on Company’s LeadershipAngela Maier
The owners of Schaeffler AG, the world’s second-largest maker of bearings, are holding discussions about the future leadership of the company.
“Talks about such topics are for good reasons strictly confidential,” Maria-Elisabeth Schaeffler and her son Georg said in a letter to employees dated today obtained by Bloomberg News. “We will inform you more in due time.”
The Schaefflers plan to name Klaus Deller, a management board member at Munich-based Knorr-Bremse AG, as a successor for Chief Executive Officer Juergen Geissinger, Manager Magazin reported earlier today. The contract has not yet been signed, and the Schaeffler supervisory board still needs to approve it, the German monthly magazine said.
Geissinger has led the company, which is also the biggest shareholder in Continental AG, since 1998. His contract expires at the end of 2014, Schaeffler spokesman Marcus Brans said, declining to comment on the report.
Geissinger came under pressure after spearheading a hostile takeover bid for Continental in late 2008. The offer, which was made just before financial markets collapsed, was accepted by more investors than expected, burdening Schaeffler with debt and nearly leading to the company’s collapse.
Since then, Schaeffler has been working to lower its debt load and hired former Dresdner Bank executive Klaus Rosenfeld as chief financial officer in 2009 to help with the effort.
To raise cash, the manufacturer has reduced its holding in Continental from more than 90 percent to 46 percent. The latest move was carried out this week, when Schaeffler and its holding company Schaeffler Verwaltungs GmbH sold a 4 percent stake for about 950 million euros ($1.29 billion), helping to cut debt to 9 billion euros. The company has also sold bonds to help refinance the loans from the 2009 deal.
Moody’s today upgraded Schaeffler’s debt one level to Ba3, the third-highest non-investment grade. The weaker link with Schaeffler prompted the rating company to boost Continental to Baa3, the lowest investment ranking.
Schaeffler, which makes roller bearings, lowered its 2013 sales forecast last month on weaker demand for industrial components. It now expects revenue to grow by 1 percent to 2 percent, down from a previous estimate of 4 percent growth.
Even with the lower growth, the company stuck to a target for earnings before interest and taxes to be the equivalent of about 13 percent of sales for the full year. Schaeffler has delivered Ebit margins of between 12.7 percent and 15.9 percent between 2010 and 2012.
“As owners, a leadership dedicated to the future of the company is among our most important tasks,” Maria-Elisabeth and Georg said in the letter. “The interest of the company and of its employees stands above the interest of individuals.”
In the letter, the Schaeffler owners denied speculation about a possible reverse takeover of Schaeffler by Continental, saying “this rumor is false and without any factual basis.”
Deller is head of commercial vehicle systems at brake manufacturer Knorr-Bremse, a family-owned company with sales of 4.3 billion euros in 2012 and more than 19,000 employees.
Knorr-Bremse has no knowledge that Deller will leave the company, Eva Seifert, a Knorr-Bremse spokeswoman, said by phone. Deller’s contract runs through April 30, 2015, she said.