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Bearings supplier Schaeffler Group has partially won its fierce takeover battle for Continental, paying €12 billion for a 30 per cent stake in the Tier One giant.

The deal will lead to the two companies working more closely together to improve competitiveness. It also creates the preconditions for a more complete merger which would combine two of Germany’s biggest engineering employers.

Schaeffler Group CEO Jürgen Geissinger said: “Continental will benefit from our strengths in mechanical, mechatronic and precision components for engines, transmissions and chassis. We will not break up Continental or sell its businesses. Continental will remain an independent company based in Hanover.”

To close the deal, Schaeffler increased its offer to €75 per share and promised to remain a minority shareholder until at least 2012. Owning no more than 49.99 per cent of the company until then means Schaeffler is unable to demand the sale of Conti’s businesses or take other restructuring measures.

Fears over the financing of any deal led some to worry that parts of Continental’s business would have to be sold to service debts. Schaeffler’s approach in July was unwanted, seen by some as a creeping takeover similar to that of Porsche and Volkswagen. Schaeffler secretly secured 36 per cent of Conti’s shares before making its initial offer of €69 per share.

The takeover bid was opposed throughout by Conti’s CEO Manfred Wennemer, but the timing of the approach – in the middle of Conti’s restructuring after buying Siemens VDO – meant the board was wary of the damage a drawn-out fight would cause. Wennemer has since resigned.

Continental is continuing its work to integrate VDO, the larger electronics and interiors supplier it bought in 2007 for €10 billion.

Continental, with a 2007 turnover of €26 billion and 150,000 employees, is three times the size of Schaeffler.