Two years ago Continental ag, one of the world's big tyremakers, saw off a consortium of big-name private-equity investors without any difficulty. But now it may be taken over by a local rival just a third of its size. On July 15th Schaeffler, a privately owned maker of bearings, surprised the markets when it announced its intention to buy a controlling stake in Continental. The E∪D11.2 billion ($17.8 billion) unsolicited bid would create the world's biggest car-parts firm by sales.rnIn 2006 Conti's shark repellent was a high share-price and a buoyant market for tyres, brakes and car electronics. Yet the world has changed, and the firm's share price has since plunged. Last year Conti paid E∪D11 billion for VDO, an electronics specialist, but the integration has been slow and the debt costly. Some of its markets, such as winter tyres, a Conti speciality, are shrinking. The three car giants in North America, where Conti looks for over a fifth of its turnover, are teetering: General Motors announced another round of factory closures and job cuts this week. High raw-materials prices and the strong euro are making life hard for German exporters.
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