The eBearing News
September 12, 2001
FAG Urges Shareholders to Reject
INA's "Hostile" Takeover Bid
copyright © 2001 eBearing Inc.
FAG Kugelfischer Georg Schafer AG (Schweinfurt, Germany) has
responded to the € 11 per share acquisition offer made
over the weekend by INA Holding Schaeffler KG (Herzogenaurach,
Germany). Privately-held INA made its surprise offer known to
FAG management only the day before making it public to FAG
shareholders.
[ click here to read the original INA acquisition offer article ]
In its response, FAG characterizes INA's bid as "hostile", says
€ 11 per share is "inadequate" and does not truly represent
the true value of the company, especially given the current
depressed economic conditions.
FAG's CEO Uwe Loos, said, "Following an initial review of the INA
offer, we urgently advise our shareholders not to tender their shares
at the price currently offered."
The full text of FAG's response to shareholders:
FAG Classes INA Offer as Hostile
CEO Dr. Uwe Loos: "Our strategy offers better long term prospects for value creation"
Schweinfurt, Germany. 11 September 2001. The Management Board of FAG Kugelfischer AG considers the bid announced yesterday by INA Holding to be a "hostile bid". FAG believes this was made clear by the suddenness of the offer, the lack of adequate consultation with FAG management and facts that became apparent at INA's press conference yesterday.
FAG's Management Board believes that the price of EUR 11 per share offered by INA is inadequate. FAG's CEO, Uwe Loos, said: "Following an initial review of the INA offer, we urgently advise our shareholders not to tender their shares at the price currently offered." The Management Board of FAG believes that the bid undervalues the shares when viewed in relation to the earnings power and value potential of the company. This is all the more true given the current market conditions, when stock prices are generally at a low-point.
FAG also believes that the offer lacks a clear, credible strategy, offering favourable prospects for a company combining INA and FAG Kugelfischer. The proposed merger of the two companies would have a negative impact for shareholders, employees and customers of FAG. Over the past three years FAG Kugelfischer has successfully implemented a strategy involving a balanced global positioning as a provider of a leading range of products and services in several core areas. FAG Management believes this contrasts with the evident positioning of INA as a family-owned company with a primarily regional focus and a one-dimensional emphasis on the automotive industry. Dr. Uwe Loos said: "In recent years FAG Kugelfischer, in contrast to INA, has focused on specialist products with high value-added and is a technology leader in a number of sectors."
The FAG CEO added: "Size alone is not sufficient grounds for a merger of two companies. Other, more tangible advantages have to be apparent." INA's plans to de-list the FAG share from the stock market and the resulting isolation from international financial markets that is characteristic of a family-owned company, would be a definite setback for FAG's continuing drive for value enhancement and acquisition activities.
The Management Board of FAG draws attention to the company's already well-advanced co-operation with its Japanese peer NTN, which exemplifies FAG Kugelfischer's global strategy. Loos added: "We don't aim to be number one in Germany at all costs, only to find that this moves us backwards several years internationally." All in all, FAG offers significantly better prospects for shareholders in the Schweinfurt-based company. Loos said: "I recommend that our shareholders not sell their shares in our company at a knock-down price. By continuing to pursue our strategy, we offer the better alternative."
A detailed statement and recommendation for shareholders is being prepared by the FAG Management Board. Additionally, the company is presently intensively reviewing all strategic options available to it.
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