The sweeping boardroom changes were announced Wednesday after a meeting of Continental's supervisory board in Hanover. Schaeffler manager Elmar Degenhart replaces Karl-Thomas Neumann under a deal which would also see Schaeffler advisor Rolf Koerter vacate his position as head of the supervisory board - with immediate effect.

Neumann had headed the Hanover-based tire and auto-parts maker Continental for less than a year and will receive a 7.4-million-euro ($10 million) severance payment.

Degenhart, who is 50, was formerly the chairman of the management board of the automotive unit at Schaeffler Group.

The management shakeup also saw the resignation of Schaeffler manager Koerfer who agreed to step down after a restructuring and broadening of the management board.

Some board members have indicated, however, that the planned deal is not yet set in stone.

Last year Maria-Elisabeth Schaeffler bought Continental at a price she later admitted was far too high. The cost of the takeover brought the Herzogenrach-based company to the brink of financial ruin and also coincided with a global slowdown in the car industry.

At a stormy board meeting in July tempers were frayed. Maria-Elisabeth Schaeffler and her son Georg failed to force out Neumann after their attempt met strong resistance from workers' representatives at Continental. To avoid further washing its laundry in public the Schaeffler duo has now struck a deal with union leaders, replacing most of the board with Continental managers.

The family-owned Schaeffler group owns 49.9 percent of Continental directly and its proxy banks hold 40 percent. The combined debt of the two companies is estimated at $20 billion.

Reports of the resolution saw Continental shares rise almost 7 percent.

nrt/AP/AFP/dpa
Editor: Nancy isenson