Schaeffler Stock Gains 10% as Scaled-Back Sale Limits `VW Hit'

  • Initial share sale "opens up whole new possibilities": CEO
  • Company now focuses on growth, wider Continental cooperation

Schaeffler AG, the German industrial-bearing maker that controls car-component producer Continental AG, rose as much as 10 percent in its first day of trading after a scaled-back initial stock sale offset potential fallout from an emissions-testing scandal enmeshing customer Volkswagen AG.

Schaeffler gained as much as 1.25 euros and was trading up 7.8 percent at 13.48 euros as of 3:05 p.m. in Frankfurt. The company sold 75 million shares Thursday at 12.50 euros apiece, raising about 825 million euros ($938 million) for the Herzogenaurach-based manufacturer.

The company originally outlined plans to sell as many as 166 million shares on Sept. 21, the first business day after Volkswagen admitted to installing software in a range of diesel engines designed to fool U.S. emissions-testing equipment. Schaeffler proceeded with a reduced offering even after the scandal hurt automotive stocks worldwide because of a larger need to refinance, prepare for acquisitions and tighten ties with Continental, Chief Executive Officer Klaus Rosenfeld said.

“The stock listing opens up whole new possibilities for us, and we’re getting new flexibility to do things,” Rosenfeld said in an interview in Frankfurt. “This was a strategic move, so it was clear we would not pull it when VW hit.” The placement price includes a volatility discount because “the investor is asking himself if he wants to buy shares from a company in the auto industry now, as half the sector may be affected by this turmoil.”

Schaeffler sold 66 million new non-voting shares as well as 9 million from the founding family’s holding company, which remains in control. The Schaefflers own a 46 percent stake in Hanover, Germany-based Continental, Europe’s second-largest tiremaker and car-parts supplier. Rosenfeld reiterated that his strategy includes expanding cooperation between the two manufacturers, and said the Continental stake isn’t for sale.

“We are now much better able to think about cooperation between Schaeffler and Continental as two independent companies,” Rosenfeld said. “In an environment like this, any cooperation must be open, not exclusive, and must be a win-win for all.”

Schaeffler can now look at acquisitions of smaller companies that would add technology in areas such as drivetrains, though any transaction is probably at least a year away, Rosenfeld said.

“First, we have to deliver,” Rosenfeld said.

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