Continental bid for Siemens VDO not enough

Frankfurt, May 26: Continental AG's indicative bid for Siemens' automotive electronics unit, Siemens VDO, is not high enough, Siemens supervisory board chairman Gerhard Cromme said on Friday.

''Continental will have to markedly improve (it's bid),'' Cromme said in an interview in the Frankfurter Allgemeine Sonntagszeitung newspaper, released in advance of publication on Sunday.

Continental's indicative bid was not yet sufficient to shelve a planned stock market floatation of the unit, Cromme was quoted by the paper as saying.

Continental has made an indicative bid of over 10 billion euros (.4 billion) for Siemens VDO, the paper's sister paper, the Frankfurter Allgemeine Zeitung, quoted well-informed sources as saying in a story released ahead of publication on Saturday.

The sources warned, however, that a binding offer could be substantially different once Continental had conducted due diligence.

A spokesman for Continental declined to comment on the report, the paper said.

A German business magazine reported this week that Continental is bidding nearly 11 billion euros for Siemens VDO and that U.S. rival TRW Automotive Holdings Corp. had also made an indicative bid.

Industry sources have said an 11 billion euro bid by Continental was realistic due to the strong financial situation of Siemens VDO, which generated earnings before interest and taxes of 315 million euros in the first fiscal half on sales of more than 5 billion euros.

Some analysts have said that Siemens would be well advised to sell Siemens VDO if the bid is indeed around 11 billion euros, saying that an initial public offering would not garner as much money for Siemens.

Private equity firms KKR and Permira are also interested, manager magazine reported.

Reuters>