German tyre firm faces bid battle

Continental is hoping its sales will top 26bn euros this year

Tyre maker Continental has received a 11.3bn euro (£8.9bn) bid from German counterpart Schaeffler, paving the way for a potential takeover fight.

Schaeffler, three times smaller than Continental in terms of sales, said it believed the two firms would make a "good combination".

Privately owned Schaeffler makes parts for car and plane systems, specialising in the manufacture of ball bearings.

Continental earlier urged regulators to ask Schaeffler to clarify its position.

'Growth possibilities'

Continental is concerned about the implications for jobs of a tie-up between the two firms as well as the level of control Schaeffler is seeking.

Reacting to the takeover approach, which valued Continental at 69.37 euros per share, the company said it was "examining" the bid and would respond in due course.

We believe that we will both have good possibilities to grow in the future Jergen Geissinger, Schaeffler chief executive See Continental shares

Continental has been affected by the weakness of the global car market, particularly in the US. The decision to spend 11bn euros in 2007 on buying car parts supplier VDO from Siemens, amassing a huge debt in the process, has also left it vulnerable to a takeover, analysts have warned.

Schaeffler said Continental had been willing to offer it a 20% stake but that it wanted a minimum of 30%, a figure which would precipitate a full takeover.

"We want to have a strategic stake in Continental," said Schaeffler chief executive Jergen Geissinger. "We believe that we will both have good possibilities to grow in the future."

Continental shares jumped more than 10% on news of the bid.