Vitesco Technologies enters into business combination agreement with Schaeffler

Regensburg, November 27, 2023. The Executive Board and Supervisory Board of Vitesco Technologies Group AG (“Vitesco Technologies”) today published a joint reasoned statement pursuant to section 27 of the German Securities Acquisition and Takeover Act (Wertpapiererwerbs- und Übernahmegesetz – WpÜG) on the voluntary public tender offer of Schaeffler AG (“Schaeffler”) dated 15 November 2023.

The reasoned statement considers the Business Combination Agreement (“BCA”), signed with Schaeffler today that sets out key parameters of the business combination and the framework for future cooperation between the two companies. In addition, Schaeffler today published an updated tender offer, which includes an increase of the offer price to EUR 94 per Vitesco Technologies share.

The Executive Board and the Supervisory Board of Vitesco Technologies (the “Boards”) agree with Schaeffler’s view that the creation of a combined company can bring significant strategic advantages in certain areas. They favour the fact that the synergies envisaged by Schaeffler will be achieved primarily through growth and long-term value creation, rather than through site closures or job losses.

The Business Combination Agreement contains the following key points:

• The combined company is to be managed from Herzogenaurach. The allocation of the remaining divisional headquarters will be discussed in more detail between Vitesco Technologies and Schaeffler. Vitesco Technologies and Schaeffler are aware of the importance of the Vitesco Technologies locations for the combined company.
• The combined company will consist of four focused divisions, with the E-Mobility Division combining the expertise of Schaeffler (E-Mobility) and Vitesco Technologies (Electrification Solutions Division).
• It was agreed that Vitesco Technologies and Schaeffler would take into account the success factors of the Vitesco Group in the combined company when designing the organisational structure as part of the implementation of the business combination.
• The terms of employment of the employees of Vitesco Technologies, in particular their remuneration or entitlement to other employer benefits, will not change in the combined company as an immediate effect of the closing of the transaction.
• It was agreed that the E-mobility division of the combined company shall be managed by Vitesco Technologies executive Thomas Stierle. In addition, it is planned to adjust the composition of the Supervisory Board of the combined company taking its needs into account.
• Furthermore, Vitesco Technologies and Schaeffler have agreed on common principles for filling leadership positions below the Executive Board for the E-Mobility and Powertrain & Chassis divisions as well as for central functional areas in the combined company.

On this basis, the Boards of Vitesco Technologies will constructively support the implementation of the tender offer and the business combination in accordance with the BCA. A joint integration committee with equal representation will be set up to coordinate the principles laid down in the BCA.

Subject to an agreement on the exchange ratio and the merger agreement, the Boards will submit the merger to the general meeting of Vitesco Technologies for resolution and, if approved with the required majority, complete it.

Vitesco Technologies will manage its business independently both until the completion of the tender offer and thereafter until a possible merger.

EVALUATION OF THE OFFER PRICE

The Executive Board and Supervisory Board have carefully and intensively analysed and evaluated the adequacy of the consideration offered. In doing so, the Boards have each made their own considerations as well as taking into account, among other factors, the inadequacy opinions of J.P. Morgan, Lazard and Perella Weinberg Partners.

On this basis, against the background of their own assessment of the current situation and the development potential of Vitesco Technologies as well as the overall circumstances of the offer, the Management Board and the Supervisory Board also consider the increased offer price per Vitesco Technologies share to be inadequate from a financial point of view.

Shareholders who do not wish to retain a stake in Vitesco Technologies in view of the intended merger of Vitesco Technologies into Schaeffler may accept the tender offer or, in the event that the market price is higher than the offer price, sell their Vitesco Technologies shares on the stock exchange.

Even if the cash consideration offered does not adequately reflect the long-term value of the company, the tender offer may represent a potentially attractive exit opportunity for risk-averse or short-term investors in the current market environment.

Shareholders who neither accept the offer nor sell their shares on the stock exchange will retain a stake in Vitesco Technologies but will receive shares in the combined company upon completion of the merger. The applicable exchange ratio will be agreed between Vitesco Technologies and Schaeffler at a later date. This agreement will be made on the basis of a determination of the enterprise values of Schaeffler and Vitesco Technologies prepared by an independent joint valuation expert in accordance with recognised valuation principles.

The Executive Board and Supervisory Board of Vitesco Technologies emphasise that Vitesco Technologies shareholders must make their own decision as to whether and to what extent they accept the offer, taking into account their individual circumstances.