Shares of FAG Kugelfischer Georg Schafer AG (Schweinfurt, Germany) rose quickly to a new 52-week high after details became clearer of a hostile takeover bid by privately-held INA Holding Schaeffler KG (Herzogenaurach, Germany).

Trading in FAG shares had been suspended when INA's Euro 11 per share offer became public. Immediately after shares began trading again, European equity markets reacted strongly and favorably to the offer, driving FAG shares to as high as Euro 10.75 from its recent Euro 7 level. Shares have since settled in the range from Euro 10.60 to 10.70.

The market's strong buying reaction comes even after FAG CEO Uwe Loos called on FAG shareholders to reject INA's bid, which totals Euro 673 million, terming it "hostile" and "inadequate". Dr. Jurgen Gessinger, INA's CEO, said his company is prepared to mount a full-scale hostile bid for FAG is talks break down between the two management teams.

INA is a privately held company whose secrecy is legendary in the bearing industry. Few outside the company have ever seen anything of INA's research and development or even the inside of manufacturing facilities.

INA ownership is split between two people, both descendants of one of the founding brothers. Maria-Elizabeth Schaeffler, widow of co-founder Georg Schaeffler, and her son George are the only shareholders.

A merger of FAG and INA would create the world's third-largest bearing manufacturer, after Sweden's SKF and Japan's NSK.

FAG shares are traded on the Munich, Berlin, Dusseldorf and Frankfurt stock exchanges. FAG is also an MDAX company, an index representing mid-sized German manufacturing companies. The company has 61.2 million shares outstanding.