German tyre firm succumbs to bid

Continental will keep its stock market listing under the deal

Tyre maker Continental has agreed to sell almost half of the company to its smaller German rival, Schaeffler, after the suitor upped its bid.

Continental had opposed an 11.3bn euros (£8.9bn; $16.7bn) offer but succumbed after Schaeffler raised its price and limited itself to a minority stake.

Schaeffler will take a 49.99% holding, valuing Continental at 12.1bn euros.

Continental's chief executive Manfred Wennemer - who had vehemently opposed the plan - is to quit later this month.

He had reacted angrily to Schaeffler secretly building up a 36% stake in the company, calling it "egotistical, autocratic and irresponsible".

Continental has insisted that as part of the deal, it will not be broken up and that it will keep its stock market listing.

No break-up

Privately-owned Schaeffler makes parts for car and plane systems and specialises in the manufacture of ball bearings - which it says are used in projects from the London Eye to NASA space shuttles.

Continental is the fourth largest supplier to the auto industry.

Observers say that the coming together of the two firms will create the world's third-biggest car-industry supplier, with sales of about $50bn.