I. Combination Effects in Business Combinations and Their Consequences
In Part I of our blog on synergies in company valuation, dated May 25, 2026, we argued against the tendency in case law and legal scholarship to disregard synergies in business combinations, to view each of the two companies involved on a stand-alone basis, and to attach decisive weight to their previous stand-alone stock prices.1) We used the current UniCredit/Commerzbank and Continental/Vitesco cases as examples. Part I focused on UniCredit/Commerzbank.2)
Part II examines Schaeffler/Vitesco. As emphasized in Part I, the author is not involved in these transactions or in the companies concerned.3) Nor is this article intended as a position statement on these transactions. Rather, it uses published information heuristically to identify aspects demonstrating that the tendency in legal debate toward stand-alone values and stock prices must be subject to limits when addressing (a) synergies and (b) the relationship between stock price and the company’s “intrinsic value.” In Schaeffler/Vitesco as well, this is reinforced by the 2026 revision of IDW Standard S1 on company valuation, which permits greater recognition of synergies and addresses criticisms the author made concerning synergy issues under the predecessor version of S1 from 2000.4) And here too, all of this matters not only for valuation practice but also for the duties of the corporate bodies involved.
II. Starting Point
1. Stock Price Versus Earnings Value
The traditionally predominant valuation methods are the earnings-value method and discounted cash flow (DCF) methods.5) These are based on forecast future earnings or excess cash flows and have traditionally been regarded in practice as more reliable than volatile stock prices. It has been argued in response that a market valuation is more meaningful than forecast-based, calculated earnings or DCF values, particularly because a shareholder can sell shares at the market price, so that the stock price must constitute the minimum value.6) Based on this latter consideration, namely the shareholder’s freedom of disposition, and Article 14 of the German Basic Law, the Federal Constitutional Court held in 1999 that the stock price constitutes the valuation floor for compensation under Section 305 of the German Stock Corporation Act (AktG). Against this background, market capitalization, as a “market-oriented method,” subsequently made its triumphal advance through valuation law and is generally recognized as a basis for estimating the value of a company.7)
2. Scope of Application / Relative Valuations
According to the prevailing view, stand-alone stock prices are the relevant valuation factor for purposes of Section 305 AktG (compensation), Section 304 AktG (recurring compensation payments), integration under Section 320b AktG, Sections 327a et seq.AktG (stock-corporation-law squeeze-out), Section 62(5) of the German Transformation Act (UmwG) (merger squeeze-out), and, according to the Federal Constitutional Court, mergers as well.8) This also applies to relative valuations, i.e., where the values of companies must be compared with one another, for example in mergers or share-based compensation. It remains disputed, however, whether the parent and subsidiary companies must be valued using the same method (the principle of methodological consistency), or whether the highest value determined for each company is to be compared (the most-favorable-treatment principle).9) The former is supported by arguments of greater valuation accuracy; the latter by constitutional considerations.
III. The Underappreciated Importance of Synergies: Schaeffler/Vitesco as an Example
As the UniCredit/Commerzbank case already illustrates, the Schaeffler/Vitesco example likewise shows that favoring stand-alone stock prices can fail to reflect the economic and legal significance of synergies.10) Notably, because Schaeffler/Vitesco is further advanced in time, it has already developed in a manner that is also becoming apparent in UniCredit/Commerzbank and is typical where a public takeover offer is followed by further steps toward group integration.
1. Facts
In 2021, automotive supplier Schaeffler initially spun off its powertrain division into the separately listed Vitesco Technologies AG, which was valued at approximately EUR 2.3 billion upon its initial listing.11) Because Vitesco’s electric-vehicle business performed better than expected and Schaeffler sought to regain access to it, Schaeffler made a public acquisition offer to Vitesco’s outside shareholders in October 2023, aimed at fully reintegrating Vitesco into the Schaeffler Group. The offer valued Vitesco at approximately EUR 3.6 billion.12) At the time of the offer, Schaeffler’s principal shareholders held approximately 50% of Vitesco, so the offer was not subject to the minimum-price rules of the German Securities Acquisition and Takeover Act (WpÜG). According to the offer document, the offer represented a premium of between 15% and 21% over the pre-offer stand-alone stock price and approximately 50% over the 2021 initial-listing price.13) Many outside shareholders accepted the offer. In March 2024, Schaeffler and Vitesco entered into a merger agreement under which Vitesco, as the transferring entity, was merged into Schaeffler, as the surviving entity.14)
2. Valuation
The share exchange ratio determined by reference to stand-alone stock prices disregards “true” synergies, or synergies.According to the valuation report appended to the merger report, following “the complete integration of Vitesco into Schaeffler in connection with the planned merger,” these benefits are expected, after one-time costs of EUR 650 million, to reach EUR 600 million from 2029 onward in the form of revenue synergies and cost savings.15) As in UniCredit/Commerzbank, these amounts are substantial in relation to the stand-alone market valuations. The report therefore advances, as a supplementary consideration, the view that, if the true synergies were allocated on the basis of “internal synergy workstreams,” the allocation would approximately correspond to the relative values implied by the stock prices.16) In an internal synergy workstream between Schaeffler and Vitesco following completion of the acquisition offer, the nature of the synergies and the magnitude of the synergy potential had reportedly been “preliminarily confirmed.” Under IDW S1 in the version then applicable, however, only non-transaction-specific synergies were to be recognized, meaning synergies attainable even without the planned merger, whereas “true” synergies were not. The merger report then classifies the contemplated synergies as “true synergies” and refers to the offer document, which states, among other things, that the combined company will offer a comprehensive product range, particularly in electrification, thereby benefiting from the accelerated growth potential of electric mobility, while further improving profitability in conventional powertrain technologies, chassis systems, and the automotive aftermarket business.17)
IV. Synergies
1. “True” and “Non-Transaction-Specific” Synergies
As explained in greater detail in Part I of the blog article, lower-court case law and legal scholarship, following IDW Standard S1 in its 2008 version and its predecessor versions, permit only “true” synergies to be excluded from valuation, meaning benefits that arise only from a combination with the specific counterparty to the transaction in question.By contrast, “non-transaction-specific” synergies are those that could have been realized independently of the planned structural measure, including “through specific transactions” with other companies.18) Such non-transaction-specific benefits therefore adhere, as it were, to the company itself and must be reflected in its valuation, although under IDW S1 (2008) and widespread lower-court case law only if the relevant combination measures had already been initiated or documented in the company’s business plan as of the valuation date. None of this, however, follows from the case law of the Federal Court of Justice.19)
2. IDW’s New Approach
In the new 2026 version of IDW Standard S1, the IDW has not only abandoned its distinction between “true” and “non-transaction-specific” synergies, but also eliminated the requirement that the relevant measures must already have been initiated or documented.Under paras. 81 et seq. and 98 et seq., the decisive question is now only whether, as of the valuation date, “an economic combination has already been implemented” or “there is a concrete possibility and expectation of newly entering into, intensifying, or expanding such an economic combination.” Under paras. 82 and 99, this determination is to be made in light of the economic and legal framework and on the basis of plausibility.20) This shift is regarded as one of the important changes in Standard S1. It is consistent with S1 (2026)’s intention to reflect, in valuation, reasonably foreseeable future opportunities and changes to the business model.The valuer must therefore also assess whether relevant future developments, including their opportunities and risks, have been appropriately taken into account.21) IDW S1 thus recognizes that market environments are changing ever more rapidly. This shift toward greater recognition of synergies is to be welcomed.22)
3. Allocation of Synergies in Business Combinations
Once synergies are added to value, the question arises how they should be allocated among the companies involved.By definition, they arise from the combination and therefore cannot be generated by either side alone.23) Three allocation approaches are conceivable: (i) allocation in proportion to the stand-alone values of the merging companies; in that case, the benefits have no effect on the relative valuation used in a merger to allocate the equity interests in the surviving entity, because they mathematically cancel out; (ii) allocation according to business-administration criteria, i.e., by identifying substantive allocation keys (the allocation-key approach); or (iii) equal allocation (the 50/50 principle). Added to these are the game-theory-based proposals of Jonas/Bertsch, which require determining numerous variables but likewise lead to equal allocation where bargaining power is equally distributed.24)
Approach (i) is objectionable because of its arbitrary character: a smaller partner would not voluntarily agree to that approach.Approach (ii), in turn, is internally contradictory because accounting or managerial choices can determine where the benefits arise.25) In particular, “true” synergies cannot be allocated to either party: by definition, they can be generated only if both sides cooperate. Other allocation criteria, such as which side first had the idea for the merger or which side was more active, turn on happenstance.26) This leaves approach (iii), equal allocation, which should again be endorsed here. First, this is a question of normative judgment and therefore a legal question.27) German civil law provides models for addressing how advantages and burdens are to be allocated between parties linked by a special legal relationship that contains no allocation rule, namely Sections 426(1), sentence 1, 430, 709(3), sentence 3, and 742 of the German Civil Code (BGB). Some of these special relationships also arise by operation of law and therefore resemble Sections 304 et seq. and 320b AktG.28) For these relationships, the law consistently provides for equal allocation. Second, equal allocation appears plausible because synergies typically cannot be clearly attributed to one side.29) Third, equal allocation reflects the fact that neither party is capable of generating the synergies alone. Fourth, in the author’s experience, equal allocation also frequently appears in negotiated solutions.30)
4. Consequences for Schaeffler/Vitesco
Equal allocation is naturally more favorable to the smaller partner than allocation in proportion to stand-alone values.The greater the synergies relative to the stand-alone values, the greater the effect.31)
The effect can be seen in Schaeffler/Vitesco.According to the underlying valuation report, stand-alone values, depending on the method used, ranged from EUR 4.0 to 5.5 billion for Vitesco and from EUR 4.9 to 8.3 billion for Schaeffler.32) Very roughly, based on the figures stated in the merger valuation report, the present value of the synergies is on the order of EUR 5 billion. Whether synergies are included, and how they are allocated, therefore has a substantial mathematical effect relative to the stand-alone values.33)
As discussed above, the authors of the 2024 merger valuation report considered the identified synergies to be “true” synergies that, under the prevailing view described above, were not to be included in the valuation.In light of the then-pending revision of S1, however, the report argued in the alternative that, if the synergies were considered, “an allocation of the synergies between Schaeffler and Vitesco” would be required.34) Initial analyses conducted by an internal Schaeffler/Vitesco synergy workstream reportedly reached the assessment that an “approximately value-proportionate allocation ... appears appropriate,” with the result that the synergies would have no effect. The valuation thus used approach (ii) above, the allocation-key approach.35) The objections set out above are not the only arguments against this methodology. Presumably against this background, the Higher Regional Courts of Stuttgart and Frankfurt have also shown some sympathy for equal allocation.36) In those cases, however, allocation based on stand-alone values (approach (i)) and equal allocation produced similar results because the companies being valued had approximately equal stand-alone values. Based on the figures above, the relationship between the stand-alone values of Schaeffler and Vitesco is materially further removed from a 50/50 allocation than in the Stuttgart and Frankfurt cases.37)
V. Conclusion
All in all, the Schaeffler/Vitesco case also brings us back to the Ballwieser quotation placed at the beginning of Part I of this blog article: “There seems to me to be no real dispute that synergy effects must be taken into account in mergers and acquisitions.After all, you pay for what you can extract.” As we showed in Part I, the legal position is not quite so simple.38) In relative valuations, the question of how to allocate synergies must also be addressed. Here too, the case for equal allocation is stronger than the alternatives.39)
Endnotes
1) https://www.reutercomplianceblog.com/artikel/ungeloeste-rechtsfragen-der-unternehmensbewertung-wunder-punkt-bei-unicredit-commerzbank-und-schaeffler-vitesco/
2) IDW Standard S1 dated Feb. 24, 2026, IDW Life 2026, 535 et seq.
3) See in greater detail II.3 below.
4) For a precise overview with further references, see Koch, AktG, 20th ed. 2026, Section 305, paras. 34 et seq.
5) BVerfG, Apr. 27, 1999 - 1 BvR 1613/94, BVerfGE 100, 289.
6) Authorities cited in Part I, see note 1 above; and forthcoming Reuter, Börsenkurse und Verbundvorteile im Reallabor aktueller Bewertungsfälle, NZG 2026.
7) For the scope of application, see Koch, AktG, 20th ed. 2026, Section 305, paras. 57 et seq.; Winner in Fleischer/Hüttemann, Rechtshandbuch Unternehmensbewertung, 2d ed. 2019, Section 16.13; both with further references.
8) BVerfG, Apr. 26, 2011 - 1 BvR 2658/10, para. 21, AG 2011, 511.
9) BVerfG, Dec. 9, 2009 - 1 BvR 1542/06, para. 21, AG 2010, 160.
10) BVerfG, May 16, 2012 - 1 BvR 96/09 et al., AG 2012, 625.
11) BVerfG, Apr. 26, 2011 - 1 BvR 2658/10, para. 22, AG 2011, 511; BVerfG, May 24, 2012 - 1 BvR 3221/10, NJW 2012, 3020, 3021, Daimler/Chrysler; disputed for unaffiliated companies (“merger of equals”), see Koch, AktG, 20th ed. 2026, Section 305, para. 58.
12) For the state of the debate, see Koch, AktG, 20th ed. 2026, Section 305, paras. 55 et seq.; supporting the most-favorable-treatment principle on constitutional grounds: Reuter, Börsenkurs und Unternehmenswertvergleich - Gleichbehandlung der Aktionäre, Synergie und die Lage bei Verschmelzungen nach BGH-DAT/Altana, DB 2001, 2483, 2489.
13) Offer document, pp. 39 et seq., https://www.bafin.de/SharedDocs/Downloads/DE/Angebotsunterlage/Vitesco.pdf?__blob=publicationFile&v=1.
14) For this term, see IV below and Part I of the blog article, note 1 above.
15) Valuation report appended to the merger report, p. 286.
16) Valuation report appended to the merger report, p. 286. In an internal synergy workstream between Schaeffler and Vitesco following completion of the acquisition offer, the nature of the synergies and the magnitude of the synergy potential had been “preliminarily confirmed.” Under IDW S1 (2008), only non-transaction-specific synergies were to be recognized, while “true” synergies were not.
17) Offer document, p. 35.
18) See note 1 above.
19) IDW Standard S1, version dated July 4, 2008.
20) OLG Düsseldorf, June 5, 2025 - 26 W 7/22, para. 64; OLG Düsseldorf, Sept. 24, 2020 - I-26 W 5/16 (AktE), para. 60; OLG Frankfurt, Dec. 5, 2013 - 21 W 36/12, paras. 119 et seq.; OLG München, June 26, 2018 - 31 Wx 190/20, para. 48; OLG Stuttgart, June 5, 2013 - 20 W 6/10, para. 169; Großfeld/Egger/Tönnes, Recht der Unternehmensbewertung, 9th ed. 2020, paras. 296, 320; Winner in Fleischer/Hüttemann, Rechtshandbuch Unternehmensbewertung, 3d ed. 2024, Sections 16.7 et seq., 16.10 et seq.; Koch, AktG, 20th ed. 2026, Section 305, para. 31; all with further references.
21) See preceding note; this is not uniformly accepted in the literature, e.g., Winner in Fleischer/Hüttemann, Rechtshandbuch Unternehmensbewertung, 3d ed. 2024, Sections 16.21 et seq.; Großfeld/Egger/Tönnes, Recht der Unternehmensbewertung, 9th ed. 2020, paras. 296, 320; Koch, AktG, 20th ed. 2026, Section 305, para. 31.
22) See BGH, Mar. 4, 1998 - II ZB 5/97, Asea/BBC, NJW 1998, 1866.
23) IDW Standard S1 dated Feb. 24, 2026, IDW Life 2026, 535 et seq.
24) Schieszl, Neufassung des IDW S1, IDW Life 2026, 579; for a differentiated view, Hachmeister, IDW S1 2026 - Evolution oder Revolution, BB 2026, 1003, 1004 et seq.
25) See Hachmeister, IDW S1 2026 - Evolution oder Revolution, BB 2026, 1003, 1004.
26) See Part I of the blog article, note 1 above; and forthcoming Reuter, Börsenkurse versus Verbundvorteile in der Unternehmensbewertung, NZG 2026.
27) Reuter, Börsenkurs und Unternehmenswertvergleich aus Eignersicht, DB 2001, 2483, 2488; IDW Standard S1 dated Feb. 24, 2026, IDW Life 2026, 535 et seq., para. 83.
28) Jonas/Bertsch, Die Bewertung und Aufteilung von Synergien, DB 2026, 1, 2 et seq.
29) See Großfeld/Egger/Tönnes, Recht der Unternehmensbewertung, 9th ed. 2020, paras. 306 et seq.; apparently contrary, Winner in Fleischer/Hüttemann, Rechtshandbuch Unternehmensbewertung, 3d ed. 2024, paras. 16.56 et seq., 16.61 et seq.
30) BGH, Mar. 4, 1998 - II ZB 5/97, paras. 11 et seq. - Asea/BBC; Reuter, Börsenkurs und Unternehmenswertvergleich aus Eignersicht, DB 2001, 2483, 2488; now expressly against the allocation-key approach also IDW Standard S1 dated Feb. 24, 2026, IDW Life 2026, 535 et seq., para. 83.
31) See Reuter, Börsenkurs und Unternehmenswertvergleich aus Eignersicht, DB 2001, 2483, 2488 et seq.; foundational: Fleischer, ZGR 1997, 381, 389, with further references.
32) See Winner in Fleischer/Hüttemann, Rechtshandbuch Unternehmensbewertung, 3d ed. 2024, Section 16.66.
33) Apparently in the same direction, Jonas/Bertsch, Die Bewertung und Aufteilung von Synergien, DB 2026, 1, 2 et seq.
34) Schaeffler and Vitesco enter into merger agreement | IR Releases | Schaeffler Group, appendix to the merger report, pp. 172, 282.
35) Merger valuation report, p. 285: long-term synergies with a projected annual EBIT effect of EUR 600 million, expected to be fully realized from 2029, against one-time costs of EUR 650 million.
36) Assumed discount rate: 9%. The present value is not based on an in-depth or verified calculation. It is intended solely to indicate the order of magnitude.
37) For greater detail, Reuter, Börsenkurs und Unternehmenswertvergleich aus Eignersicht, DB 2001, 2483, 2488; see also OLG Stuttgart, Mar. 8, 2006 - 20 W 5/05, section 4 of the reasons, openjur para. 172; OLG Frankfurt, Dec. 5, 2013 - 21 W 36/12, openjur paras. 133 et seq.; in both cases, allocation in proportion to stand-alone values and equal allocation led to similar results. For an overview, Bungert in Fleischer/Hüttemann, Rechtshandbuch Unternehmensbewertung, 3d ed. 2024, Section 22.35, and Winner, id., paras. 16.56 et seq., 16.61 et seq.
38) For greater detail, forthcoming Reuter, Börsenkurse und Verbundvorteile im Reallabor aktueller Bewertungsfälle, NZG 2026.
39) OLG Stuttgart, Mar. 8, 2006 - 20 W 5/05, section 4 of the reasons, openjur para. 172; OLG Frankfurt, Dec. 5, 2013 - 21 W 36/12, openjur paras. 133 et seq.
