Partmakers has 6 billion euros in liquidity

Conti can afford another big acquisition, CFO says

Partmakers has 6 billion euros in liquidity

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BERLIN (Reuters) -- German partsmaker Continental would be able to fund another multi-billion-euro acquisition in the next 18 months to spur growth, its finance chief said on Tuesday.

Buoyed by almost 6 billion euros ($8.33 billion) of liquidity, Continental is seeking deals in the rubber industry and other non-automotive segments to trim its reliance on volatile car markets.

The 1.4 billion euro purchase of Veyance Technologies from U.S. private equity investor Carlyle Group announced in February is one of Continental's biggest deals to date, but more deals are possible.

"Looking at our financial profile, we could once again shoulder an acquisition of the size of Veyance within the next 18 months," CFO Wolfgang Schaefer told Reuters after Continental published first-quarter results.

Continental, which posted a 20 percent jump in quarterly adjusted earnings before interest and tax (EBIT), cut debt last year to the lowest level since the 2007 purchase of Siemens' VDO auto-electronics division, which left it vulnerable to a hostile takeover bid.

The VDO transaction caused Continental's borrowings to swell as high as 11 billion euros and led engineering group Schaeffler into an ill-crafted takeover offer amid the 2008 global economic crisis.

Continental said on Tuesday that net debt fell by a quarter year on year to 4.2 billion euros on March 31.

The company also refinanced a 4.5 billion euro loan last month and said it had liquidity of almost 6 billion euros.

"We have enough liquidity to finance the Veyance purchase," the CFO said. "Even after that, we have more liquidity than needed to fund ongoing operations."

Schaefer didn't rule out issuing a bond this year to help fund expansion, but said there are no such plans at present.

Continental plans further small acquisitions in the coming months, he said, after announcing last month that it intends to buy the remainder of emissions technology business Emitec from partner GKN of the UK.

Said Schaefer: "We keep looking for potential supplements and reinforcements to our portfolio."

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