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The eBearing News
September 29, 2003
FAG Restarts SNFA Takeover Action
copyright © 2003 eBearing Inc.
In an unpublicized move, FAG Kugelfischer Georg Schafer AG (Germany, a division of INA Holding
Schaeffler KG, Germany), notified the European Commission it once again seeks to
acquire SNFA S.A., the French aerospace and precision bearing company.
The acquisition had been on track once before, through much of 2002.
• article: FAG confirms plan to acquire SNFA
However, FAG withdrew the acquisition plan for SNFA late in 2002 when the Bonn-based Bundeskartellamt,
or German Federal Cartel Office, made it clear the acquisition would not be approved.
At that time, in late 2002, what eBearing was able to determine -- never confirmed nor denied by any
of the participants -- is that SKF complained to the Bundeskartellamt that the acquisition
would result in a near-monopoly in Europe for the types of bearings produced by SNFA.
A representative of the Bundeskartellamt confirmed to eBearing in late 2002 that FAG's "notification
was withdrawn." He went on to say, "The Federal Cartel Office had argued that there would be a creation of
a dominant position on the market for angular contact ball bearings. Due to these concerns,
the notification was withdrawn."
• article: FAG abandons SNFA acquisition
Last week, however, INA/FAG, -- along with a key partner, American International Group (AIG, USA) --
quietly filed a "Notification of Concentration" with the European Commission. The notification seeks EC
approval for, "joint control of the French undertaking SNFA, by way of purchase of shares."
• Notification of a concentration (Case COMP/M.3093 - INA/AIG/SNFA),
published in the
Official Journal of the European Union, Sept. 26, 2003
Because INA/FAG does not need any outside financial help to acquire SNFA, AIG's involvement
might seem puzzling at first, as might the decision to reopen an acquisition sure to be
rejected again by the Bundeskartellamt.
Involving AIG in the transaction, however, has the effect of changing the approval criteria and
venue. Without AIG, the individual companies involved in the acquisition are small enough that it must be
approved by local country authorities. But with corporate giant AIG involved, jurisdiction over the
transaction shifts to the European Commission.
The EU Merger Regulation, in effect since 1990, is built on the principle of a one-venue
process, where large cross-border transactions are scrutinized exclusively by the European
Commission and do not have to be cleared in any national EU jurisdiction.
Essentially, the European Commission has exclusive jurisdiction over deals involving companies with a
combined, worldwide sales total of at least € 5 billion, and where at least two of the companies
involved also have more than € 250 million each in European sales, unless they each realize
more than 2/3 of their European sales in the same country.
So although the Bundeskartellamt or Conseil de la Concurrence might still today object to INA/FAG
acquiring SNFA, they are no longer involved.
INA/FAG stands a much better chance for approval from the European Commission. It is
more lenient in approving acquisitions, and works with a broader scope. Since 1990, the EC has
rejected fewer than 1% of the mergers brought before it.
Most proposed mergers brought to the EC are cleared within the one month ("Phase 1" or "Article 6") investigation
period. A very small number are subjected to in-depth ("Phase 2" or "Article 8") investigations, which
can take up to four months to complete.
About AIG
American International Group Inc. (AIG, USA) was founded in Shanghai in 1919. Worldwide sales
now top $67 billion, and in 2002, AIG was the most profitable multiline insurance company
in the world. Chairman Maurice "Hank" Greenberg is well known in the business community.
AIG, however, is not without its problems. Last week, the company agreed to pay $10 million to settle a U.S.
Securities and Exchange Commission case alleging the company helped Brightpoint Inc. report
inflated earnings in 1998.
According to the SEC, "The fraud charges against AIG resulted from AIG's role in fashioning and
selling a purported insurance product that Brightpoint used to report false and misleading
financial information to the public. In settling the Commission's charges, AIG agreed to pay a
$10 million civil penalty," reflecting, "AIG's participation in the Brightpoint
fraud, as well as misconduct by AIG during the Commission's investigation of this matter."
AIG will also, "retain an independent consultant to make binding recommendations concerning
AIG's internal controls to ensure that AIG's insurance products will not be used in the future
to violate the securities laws."
AIG's $10 million fine is the second-largest ever against a company for accounting fraud.
The European Commission wants to hear from you
The European Commission invites interested third parties to submit their possible
observations regarding this proposed acquisition.
Observations must reach the Commission not later than 10 days following the date of this
publication (10 days from September 26, 2003).
Observations can be sent by fax (No 32-2) 296 43 01 or 296 72 44 or by post, under
reference COMP/M.3093 -- INA/AIG/SNFA, to:
European Commission,
Directorate-General for Competition
Merger Registry
J-70
B-1049 Brussels
Belgium
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- by Bruce A. Carr
from individual research,
tips and commercial sources.
Bruce Carr edited this content.
Copyrighted material; unauthorized reproduction prohibited.
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eBearing.com ... for everything that moves™
Entire contents Copyright © 1999-2011, eBearing Inc. All rights reserved.
eBearing.com and "... for everything that moves" are registered trademarks of eBearing Inc.
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