Volkswagen CEO warns against Continental battle

By Jan Schwartz

WOLFSBURG, Germany (Reuters) - The head of Europe's biggest car maker, Volkswagen, spoke out in favour of a merger between Schaeffler and car-parts supplier Continental but warned against a hostile bid by the family firm.

Earlier in the week, ball-bearing maker Schaeffler swooped with an $18 billion offer to buy the German tyres-to-brakes group.

Continental (CONG.DE: Quote, Profile, Research) Chief Executive Manfred Wennemer has vowed to fight to stay independent, saying the offer is too low and warning the predator may break up the company.

Wennemer was looking isolated, however, after a company source told Reuters that Continental chairman Hubertus von Gruenberg saw little hope for a defence.

Now Martin Winterkorn, the chief executive of Volkswagen, one of Schaeffler and Continental's biggest customers, has spoken out in favour of a deal, warning, however, against a prolonged battle between the two.

"What I would not see as positive is a power struggle with a hostile takeover," Winterkorn told journalists in remarks embargoed for Friday. "I would have a problem if they were to do battle for a half a year."

Winterkorn also signalled that Volkswagen (VOWG.DE: Quote, Profile, Research) would not act as a white knight or friendly bidder for Continental. This would be one alternative for management fighting the Schaeffler offer.

"As soon as we would get involved, the supplier would be blocked for other car makers."