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HANOVER, Germany (Reuters) -- Continental AG CEO Manfred Wennemer was plotting his defense on Thursday against an unwanted $17.40 billion bid from Schaeffler even as divisions began to emerge with his own chairman about the offer.

On Tuesday, ball-bearing maker Schaeffler announced a cash bid worth at least 69.37 euros per share -- below Continental's stock price of about 72 euros.

But Schaeffler's advances have stirred resentment at the headquarters in Hanover of the tyres-to-brakes group. On Wednesday, Wennemer slammed the offer as too low and warned that the predator could ultimately dismantle Continental.

It was unclear, however, whether Wennemer had the support of his chairman Hubertus von Gruenberg after a company source told Reuters that von Gruenberg said internally he saw little hope for a defense. Continental declined to comment.

The takeover would be the biggest so far this year in Europe and would put the combined group head-to-head with Robert Bosch GmbH and Japan's Denso Corp. among the world's largest auto suppliers.

Wennemer has also turned to Germany's stock-market watchdog to intervene after Schaeffler won control of more than a third of its shares through options organized for it discreetly by banks. Bafin said on Thursday it would investigate.

Schaeffler, owned by German billionaire Maria-Elisabeth Schaeffler, hit back at Wennemer's attack, labeling his tone "incomprehensible".

The case has meanwhile roiled politicians angry about Schaeffler's tactics.

German politicians promised to close legal loopholes that may have allowed Schaeffler to build up such a stake covertly.

OBSTACLE COURSE

Continental's Wennemer could erect other hurdles, such as pushing through a capital raising or finding a friendly white knight bidder. Analysts, however, see few companies that might make such a bid.

Italian tire maker Pirelli said it had no interest in either Continental or its tires business, which might be sold in any break-up.

Japanese rival Bridgestone and France's Michelin both declined to comment on speculation they might be interested in the German firm's tires business.

Weakened by an 11 billion euro ($17.40 billion) debt pile accumulated to pay for its purchase of rival Siemens VDO -- which makes the technology inside satellite navigation and fuel injection systems -- Continental now faces a slowdown in car buying as high oil prices bite.

If Schaeffler succeeds in buying the group, which is three times its size, it would also be the first time a German family business has taken over a company listed on the country's blue-chip DAX index.

Continental's share price closed down more than 2 percent to 72.10 euros after three days of steady gains when it climbed by more than a third.