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Germany's Schaeffler Group finally claimed the scalp of auto parts maker Continental AG (CONG.DE) Chief Executive Karl-Thomas Neumann on Wednesday by breaking down union opposition to his ouster with a last-minute compromise offer.
Locked in a power struggle for months, the ball bearings manufacturer that controls 90 percent of Continental installed the head of its own automotive components business, Elmar Degenhart, as the new CEO effective immediately, both companies said in statements.
"It was a situation as it so often is where a result is in doubt but we made it and the board reached this decision," said Deputy Chairman Werner Bischoff, the senior labour representative on the board.
"I am first of all happy that the company can get its footing back and the personnel discussion can finally stop and we can finally get back to our business of making automotive parts," he said.
In exchange, Schaeffler confidante Rolf Koerfer agreed to step down from his post as chairman of the board as soon as a new finance chief is found, so a more neutral candidate acceptable to Continental's unions can take the helm.
Three Continental senior executives were also appointed to Continental's management board to serve as a counterweight to CEO designate Degenhart.
"In the run-up to the meeting, there was a big discussion on whether there will be a capital increase. We believe this is important and necessary and that's why we need a qualified CFO," Bischoff told reporters.
The CFO post has been vacant since Alan Hippe left in April.
Bischoff said he expected a new chairman would be appointed at the next supervisory board meeting on Sept. 29.
The union representative thanked former German Chancellor Gerhard Schroeder and Martin Blessing, CEO of Schaeffler creditor Commerzbank (CBKG.DE), for exerting pressure on the bearings maker to come to a mutually acceptable solution.
Schroeder had examined whether Schaeffler had violated an investor agreement with Continental, and in a statement he said the compromise was sufficient.
"That means that the reasons for possible legal action have become null and void," Schroeder stated.
The deal was struck two weeks after a meeting at which Schaeffler failed to oust Neumann due to resistance from Continental's unions.
The Unions had refused to sacrifice a respected manager who had fought hard to raise over a billion euros in fresh capital for Continental, a highly indebted company.
Schaeffler, which had sales of just 9 billion euros last year, is even more in debt after borrowing over 10 billion to finance its hostile takeover of Continental.
Although it has asked its five creditor banks to waive interest payments and cannot afford to stump up fresh cash to subscribe to new shares, Schaeffler confirmed on Wednesday that Continental's board continues to support a capital increase that would dilute its stake.
"The Schaeffler Group continues to adhere to its objective of creating a global technology group consisting of the three divisions Automotive, Industrial and Rubber," a statement by the company said in a possible indication that no disposals were immediately planned.
Shares of Continental closed down 1.5 percent at 23.64 euros, after recovering from an earlier low of 23.08 euros, while the broader market finished the session up a good 1 percent.
| Product Model | Inside Diameter | Outside Diameter | Thickness |
| 7008DF KOYO | 40 | 68 | 30 |
| HAR008CDF KOYO | 40 | 68 | 30 |