UPDATE 3-Schaeffler wins struggle over Continental CEO

* Chairman expected to step down on Sept 29 - unions

* Capital increase to be prepared once new CFO found

* Continental shares close down 1.5 pct, off lows

 

(Recasts with statements from press conference)

 

By Arno Schuetze and Christiaan Hetzner

 

HANOVER/FRANKFURT, Aug 12 (Reuters) - Germany's Schaeffler Group finally claimed the scalp of auto parts maker Continental AG (CONG.DE) Chief Executive Karl-Thomas Neumann on Wednesday by breaking down union opposition to his ouster with a last-minute compromise offer.

Locked in a power struggle for months, the ball bearings manufacturer that controls 90 percent of Continental installed the head of its own automotive components business, Elmar Degenhart, as the new CEO effective immediately, both companies said in statements.

"It was a situation as it so often is where a result is in doubt but we made it and the board reached this decision," said Deputy Chairman Werner Bischoff, the senior labour representative on the board.

"I am first of all happy that the company can get its footing back and the personnel discussion can finally stop and we can finally get back to our business of making automotive parts," he said.

In exchange, Schaeffler confidante Rolf Koerfer agreed to step down from his post as chairman of the board as soon as a new finance chief is found, so a more neutral candidate acceptable to Continental's unions can take the helm.

Three Continental senior executives were also appointed to Continental's management board to serve as a counterweight to CEO designate Degenhart.

"In the run-up to the meeting, there was a big discussion on whether there will be a capital increase. We believe this is important and necessary and that's why we need a qualified CFO," Bischoff told reporters.

The CFO post has been vacant since Alan Hippe left in April.

Bischoff said he expected a new chairman would be appointed at the next supervisory board meeting on Sept. 29.

The union representative thanked former German Chancellor Gerhard Schroeder and Martin Blessing, CEO of Schaeffler creditor Commerzbank (CBKG.DE), for exerting pressure on the bearings maker to come to a mutually acceptable solution.