By Ozan Ergenay and Christina Amann
BERLIN (Reuters) -Vitesco shares reached a record high on Monday on news that family-controlled Schaeffler AG will launch a tender offer valuing the German powertrain supplier at 3.64 billion euros ($3.83 billion).
Schaeffler aims to eventually merge the two groups
to create a more competitive supplier in the electric vehicle segment, as well as simplifying the Schaeffler family's empire, which includes stakes in Vitesco and Continental AG (ETR:CONG).
"With the business combination, a leading motion technology company with four focused divisions and revenues of approximately 25 billion euros will be created," Schaeffler said.
Germany's billionaire Schaeffler family holds all voting rights and 75% of shares in the namesake supplier of electric vehicle components. Via its holding, it also holds 49.9% of Vitesco and 46% of Continental.
The planned transaction could lead to 600 million euros in "sales and cost synergies" by 2029, Schaeffler said in its statement, adding it also plans to simplify Vitesco's shareholder structure in the process.
Schaeffler AG said it had already reached agreement with the Schaeffler family holding over its 49.9% Vitesco stake, adding it would offer remaining shareholders 91 euros per share, 20% more than last week's closing price.
Shares in Vitesco, which was spun off from Continental in 2021, rose by a fifth on Monday to 90.70 euros a piece at 1142 GMT.
Schaeffler shares were down 4.7%.
Schaeffler expects the deal, which will not be subject to a minimum acceptance rate, to close by January 2024.
It will not need to raise capital to fund the buyout Schaeffler Chief Executive Klaus Rosenfeld said, adding that the deal would be favourable for Schaeffler's debt ratio.
The offer was not discussed with Vitesco in advance because of overlaps in the membership of the two companies' supervisory boards, but Schaeffler was confident that it would lead to a "friendly merger", Rosenfeld said.
Vitesco confirmed the offer in a statement and said its board would decide on next steps.
Georg Schaeffler, chair of the Schaeffler supervisory board, also sits on Vitesco's board, as does Austrian businessman Siegfried Wolf, who also owns 5% of Schaeffler.
As part of the deal, Schaeffler's listed preference shares are to be converted into ordinary voting shares and the group's following free float will be around 30% after the transaction.
($1 = 0.9496 euros)