9 October 2023 went down in Schaeffler's history. On this day, the industrial and automotive supplier announced the takeover of drive specialist Vitesco, for which it receives the Corporate Finance Award from Börsen-Zeitung in the M&A category.

This was a smart move, per se, by CEO Klaus Rosenfeld and Supervisory Board Chairman Georg Schaeffler. Because in the transformation to electromobility, economies of scale increase competitiveness in the automotive industry. The reorganisation of the industry is leading to growing pressure to consolidate. With the acquisition, Schaeffler is transforming itself into a full-range supplier.

The expanded Schaeffler Group has moved closer to the big three in the industry – Bosch, ZF and Continental. The new entity has an annual turnover of over 25 billion euros with 120,000 employees, of which Vitesco provided 38,000.

On the day of the announced takeover, Rosenfeld spoke of a „strategic logic“. Both companies would be stronger together. The CEO promised cost synergies of 600 million euros per year. These are to be realised by 2029.

The acquisition was financially manageable for the SDax member. Schaeffler initially offered 91 euros in cash per Vitesco share, and increased the offer by 3 euros to 94 euros per share at the end of November 2023. This corresponded to a valuation of 3.76 billion euros. It was 120 million euros more than envisaged in the original offer documents. Schaeffler thus responded to criticism from the Vitesco Executive Board at the time, which criticised the offer as too low. Investors speculated on an improvement. After 9 October 2023, Vitesco shares, which jumped by 21%, stubbornly traded above the initial offer price. The non-voting Schaeffler preference share lost 4.8% to 5.20 euros.

Schaeffler's move was expected. Investors had already speculated about advances in the direction of Vitesco. The Schaeffler family already controlled 49.9% of the former Continental spin-off via a holding company. The Schaeffler clan has held around 46% of Continental since an unsuccessful takeover attempt during the 2008 financial crisis. Due to the shareholder structure, the takeover made sense from Schaeffler's point of view. The family holding company did not have to tender its shares. As a result, Schaeffler AG paid a total of „only“ 1.8 billion euros for the complete acquisition of the free float shares.

According to Rosenfeld, Schaeffler arranged a „comprehensive financing package“. This included bridge financing. The major banks, Bank of America, BNP Paribas and Citigroup fully secured the financing. At the beginning of 2024, Schaeffler refinanced these bank loans via two bond issues with a total volume of 1.1 billion euros.

The acquisition went relatively smoothly. Shareholders' meetings of Schaeffler and Vitesco approved the merger in 2024. At the beginning of October last year, one year after the announcement, Vitesco was legally merged with Schaeffler. Rosenfeld kept to his ambitious schedule.

As planned, Schaeffler converted its non-voting preference shares into ordinary shares with voting rights on a one-for-one basis as part of the merger. As a result, the company reorganised the power structure within the shareholder group. The independent shareholders now have the same rights at general meetings as the owner family. Under Rosenfeld's aegis, Schaeffler AG, which went public in 2015, is thus moving closer to the model of modern, contemporary corporate governance. Around 70% of the share capital is held by the family, and 30% is in free float.

However, the momentum for the share hoped for with the reorganisation has so far failed to materialise. The industry crisis is increasingly overshadowing events. In the middle of last year, Schaeffler and Vitesco lowered their annual forecasts. The slump in the electric vehicle business, particularly in Germany, and the global economic downturn are weighing on the companies.

After the takeover was completed, Schaeffler felt more and more headwinds. At the beginning of November 2024, just one month after the merger was completed, the group announced that it would cut 4,700 jobs in Europe. Of these, 2,800 will be at ten locations in Germany. Vitesco is affected in Regensburg, Nuremberg and Schwalbach. The Group management intends to implement the plan from 2025 to 2027.

Schaeffler expects the headcount reduction to result in annual savings of 290 million euros from 2029 onwards. However, the measure is initially a financial burden. Schaeffler acknowledges that provisions and costs for relocations will result in expenses of 580 million euros.

A year earlier, Schaeffler had wanted to realise synergies with Vitesco through growth and not through site closures and staff reductions, according to the offer documents.

The developments show how quickly the situation has changed to the disadvantage of automotive suppliers. It will be a long time before the benefits of the acquisition become apparent in the operating business. It depends on how quickly the demand for e-cars recovers in Germany. Looking back, the acquisition came at an unfavourable time. However, fluctuations in demand are risks that have to be factored in.

Therefore, 2025 will also be difficult for Schaeffler. At the earnings presentation in March, Rosenfeld spoke of „volatilities“ that will also "characterise“ this year. The group is expecting an operating loss in the electrical division. The group made a loss of 605 million euros in 2024.