Schaeffler Group (Germany; parent of LuK and INA/FAG Bearings) is reportedly evaluating its options in acquiring Continental AG (Germany) as Conti's share price continues to tumble along with its potential in the slumping global auto industry it serves.

Schaeffler has bid €75 per share for Continental's outstanding shares, but since the deal was announced, Conti's shares have plummeted to the €35 range.

Amid the turmoil, 90% of Continental's shares were tendered off to Schaeffler's offer -- far in excess of the 50% maximum stake negotiated between Schaeffler and Continental. Therefore, Schaeffler must find buyers as soon as possible for that excess 40%, or "warehouse" the shares by having one of its banking partners acquire the shares.

However, if it warehouses the excess shares, Schaeffler will still have to finance the entire 90% position, leaving it deeply in debt and underwater on the excess shares.

One option reportedly being explored would involve a friendly co-investor to buy Schaeffler's excess shares, then agree to gradually sell them back to Schaeffler in the future (the agreement with Conti allows Schaeffler's ownership share to grow gradually). Maria-Elisabeth Schaeffler said: "It cannot be ruled out that a long-term oriented investor could take a larger stake in Continental."

It should be noted that Schaeffler has not been paying €75 for every Conti share; as the price declined, Schaeffler was reportedly actively buying them on the open market at prices far below the €75 level. Schaeffler has not revealed a strategy for which shares and at what price it will keep or dispose of the excess Conti shares tendered.