Siemens Outperforms, Conti Rumored to be Upping Bid; Siemens to Begin Accepting Offers by this Weekend

Shares in Siemens AG outperformed with traders pointing to news reports and market rumors that on the one hand, Blackstone has teamed up with TRW and made a $16.5 billion bid for Siemens' VDO automotive unit, while on the other hand Continental is rumored to be preparing to increase to its own offer for the unit to $20 billion. Dealers were cautious about the Continental rumor however, and pointed out that this may well be too high a price to pay for the Siemens division.

From AFX News Limited

LONDON — Shares in Siemens AG outperformed with traders pointing to news reports and market rumors that on the one hand, Blackstone has teamed up with TRW and made a $16.5 billion bid for Siemens’ VDO automotive unit, while on the other hand Continental is rumored to be preparing to increase to its own offer for the unit to $20 billion.

Dealers were cautious about the Continental rumor however, and pointed out that this may well be too high a price to pay for the Siemens division.

"I think it sounds a bit high," said one trader referring to the rumored $20 billion bid. He further pointed out that Continental has a good track record with respect to M&A and has been very price sensitive in the past.

Another trader pointed out that Continental shareholders authorized the possibility of a 50 percent capital increase in April.

"They moved the credit line and can go up to $23 billion," he said. "A capital increase wouldn’t surprise me."

However, earlier this week, industry sources said Continental AG has raised its offer for Siemens AG’s VDO automotive unit to about $15 billion from about $14 billion industry sources said.

Market sources agreed that a Continental takeover would offer higher synergy effects than an IPO or an acquisition by Blackstone.

In related news, Siemens AG is accepting binding offers for its automotive electronics unit Siemens VDO Automotive (VDO) by the weekend, Financial Times Deutschland reported, citing sources familiar with the matter.

Both Continental AG and U.S.-based airbag manufacturer TRW Automotive are preparing offers, it said.

Siemens’ supervisory board will discuss in a meeting on July 25 whether to sell the unit or to offer shares in it to investors in an initial public offering, the newspaper said.

The parties involved either declined to comment or were not available for comment, FT Deutschland said.