Continental Rejects $17.8 Billion Bid from Schaeffler

Tires-to-brakes maker Continental rejected a surprise 11.2 billion euro ($17.8 billion) bid from Schaeffler Group on Wednesday, saying only the family-owned firm would benefit and that its offer was too low.

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Late on Tuesday, ball-bearing firm Schaeffler announced the terms of its offer and sought to calm management fears, saying that it did not intend to break up Continental or slash jobs, adding the two firms were a good fit.

If Schaeffler succeeds in buying the Hanover-based group, which is three times its size, it would be the first time a German family has taken over a company listed in the country's blue-chip DAX index.

Continental has been nervous about the interest of Schaeffler, owned by German billionaire Maria-Elisabeth Schaeffler, and has appointed Goldman Sachs to advise it on a defense.

On Wednesday, it came out strongly against the offer, branding the move opportunistic.

It said that Schaeffler's offer did not reflect the full value of the company, adding: "There is no convincing strategic rationale for a business combination."

"Schaeffler is trying to achieve control over Continental in an unlawful manner," it continued.

Continental's shares were largely unmoved by the company's reaction, following strong gains in recent days.

Continental was built through a series of acquisitions of high-tech car parts makers, bought with money earned selling car tires.

Weakened by heavy borrowing to pay for its roughly 11 billion euro purchase of VDO -- which makes the technology inside satellite navigation and fuel injection systems -- Continental now faces a slowdown in car buying as high oil prices bite.