FRANKFURT, Aug 12 (Reuters) - Schaeffler Group finally claimed the scalp of auto parts group Continental AG's Chief Executive Karl-Thomas Neumann on Wednesday after winning the backing of labour representatives on the supervisory board.
Controlling shareholder Schaeffler, which has been locked in a power struggle with Continental for months, installed the head of its own automotive business, Elmar Degenhart, as the new CEO, both companies said in statements.
Shares of Continental were down 2 percent at 23.51 euros by 1420 GMT, have recovered from an earlier low of 23.08 euros, while the German midcap index was up 0.9 percent.
The move came two weeks after a meeting at which Schaeffler failed to oust Neumann. Schaeffler owns 49.9 percent of Continental direcly, and another 40 percent of shares it was tendered in its $18 billion takeover last year are parked with banks.
Rolf Koerfer, a Schaeffler appointee, agreed to step down as chairman of Continental's supervisory board once its management shakeup is complete, including finding a new finance chief.
Koerfer will make room for a new chairman outside of the squabbling camps, they said.
The board confirmed its July 30 authorisation for management to prepare a possible capital increase.
The deal was in line with an expected compromise reported by Reuters this week that aimed to halt a bruising power struggle between the two German automotive suppliers.
Sources told Reuters that Schaeffler had offered to remove Koerfer as chairman in exchange for gaining labour's consent to dismiss Neumann, making him the second chief executive to go in 12 months.
Schaeffler, which seized control at Continental only to have the deal backfire as its debt mounted and car markets collapsed, tried to oust Neumann after he accused Schaeffler's owners and management of destroying value by blocking a merger in a letter that was leaked to the German media.
Schaeffler launched a surprise coup last month to replace Neumann in a move that failed because of the unanimous resistance of the 10 labour representatives on the board.
(Reporting by Christiaan Hetzner; Editing by David Cowell) ($1=.7079 Euro) Keywords: CONTINENTAL/

(christiaan.hetzner@thomsonreuters.com; Reuters Messaging: christiaan.hetzner.reuters.com@reuters.net; +49 69 7565 1249)

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