Hanover - Giant German auto supplier Continental AG approved a takeover offer by smaller rival Schaeffler early Thursday morning after weeks of talks.

Bearings manufacturer Schaeffler agreed to increase its offer to 75 euros per share from 70.12 euros, the companies said. Continental chief executive Manfred Wennemer will step down by August 31.

Schaeffler will maintain only a minority share of tyre-maker Continental for four years.

The Continental board last month formally rejected Schaeffler's earlier 70.12 euros a share bid as too low.

A slump in the car industry combined with an 11-billion- euro acquisition last year had helped to drive down Continental's shares, leaving the group exposed to takeover.

Schaeffler had already secured the rights to about 36 per cent of Continental's shares. The companies would have a combined turnover of about 33 billion dollars. (dpa)