According to the business family Schaeffler and the Austrian investor Siegfried “Siggi” Wolf (65), David Einhorn (54) is number three at Vitesco – at least in the shareholder ranking. The American star investor holds a good 3 percent of the shares in the automotive supplier that specializes in drive technology; In a presentation in May, he publicly outlined the enormous potential of the shares. And Einhorn doesn’t think much of the idea of handing it over to the Schaefflers according to their ideas.
In a letter, the hedge fund manager now addresses a special committee of the Vitesco supervisory board, who is currently examining the Schaeffler offer. His credo: Don’t sell too cheaply. “We believe that a conservative valuation for Vitesco is at least 150 euros per share and a goodwill of at least six billion euros,” writes Einhorn. That would be six to nine times what the Vitesco leadership around CEO Andreas Wolf (62) expects as operating profit in 2026.
To put it into perspective: Schaeffler itself is currently valued at almost 3.4 billion euros on the stock exchange – so Einhorn values Vitesco significantly higher.
If the committee accepts Schaeffler’s proposal, Einhorn sees “Vitesco’s true long-term value at risk.” The supplier from Regensburg, only in September 2021 Continental spun off, is better positioned for the change towards electromobility than many other suppliers. “At the moment, Vitesco is the clear market leader in Germany and worldwide for electrical components, and we want the company to continue on this path,” writes Einhorn. A sale to Schaeffler could “derail this success story.”
David Einhorn is one of the world’s better-known investors and is considered particularly influential in the USA. He became known for betting on falling prices or company bankruptcies. One of the most prominent cases: the bankruptcy of the Lehman Brothers bank in 2008. Einhorn had predicted this in advance – a boost in awareness for the investor. However, the balance sheet of his hedge fund Greenlight Capital is not flawless. In 2014, Einhorn managed more than twelve billion US dollars; after a few failures, it was recently only around 1.4 billion dollars. The supplier made Greenlight’s entry into Vitesco public in a mandatory announcement on September 18, 2023, around three weeks before the Schaefflers’ takeover offer.
Schaeffler needs electrical expertise
When presenting his plans, Schaeffler CEO Klaus Rosenfeld (57) praised long-term synergy opportunities of 600 million euros – per year. Einhorn and his team, on the other hand, see those responsible for Vitesco as having a duty to “secure their leadership position and not sell them below value to competitors who have missed the train.”
Schaeffler is considered a late bloomer Electromobility, the company’s auto business is heavily dependent on the internal combustion engine. It’s a discontinued model, says Einhorn, and that’s also reflected in the stock market. Schaeffler’s shares have disappointed with a negative return of 41 percent since the IPO in 2015. In a joint company, Schaeffler’s lack of future viability would overshadow Vitesco’s potential and lead to a low valuation, warns Einhorn.
Specifically, the investor demands three things from Vitesco’s decision-makers:
The committee should make it publicly clear that it is aiming for a fair assessment of Vitesco – both in absolute terms and in comparison to Schaeffler.
The special committee should call on Schaeffler to drop the voluntary takeover offer and the proposed stock merger and to reach a standstill agreement. Further discussions about a merger should then be held on this basis.
Einhorn would prefer to see Vitesco continue to be independent anyway. In any case, there are better options than the Schaeffler offer. If anything, Vitesco should sell its combustion engine division to Schaeffler and thus become a pure electrical supplier. Alternatively, Vitesco could also sell its electrical unit to its shareholders in a spin-off.
In financial circles, however, it is assumed that Schaeffler will get the deal done. The Franken family, which owns the company, already holds 49.9 percent of the Vitesco shares, and Schaeffler CEO Rosenfeld secured a further 9 percent of the voting rights for them through an options transaction. Vitesco supervisory board chairman Siggi Wolf, the second-largest shareholder with 5 percent, is also considered a friend of the clan. He could give up his shares, The Schaefflers would then already have 64 percent
.
That would almost be enough to push through the merger of the two companies planned after the takeover at a Vitesco general meeting. 75 percent of the votes would be required; and as a rule, not all shareholders are represented at general meetings. Together, a giant would emerge with a good 120,000 employees, 25 billion euros in sales and over 100 plants worldwide.
The Vitesco leadership is probably interested in Schaeffler increasing its offer even before Einhorn’s letter. Five out of seven board members own Vitesco shares, most of them CEO Andreas Wolf. The acceptance period for the offer is expected to run until mid-December. Schaeffler wants to wrap up the deal in January 2024.
If David Einhorn has his way, it won’t happen. If necessary, the investor doesn’t want to just write a letter to convince Vitesco’s special committee. “Let me know,” Einhorn concludes his letter, “if I can add to this letter in any way.”