Launching a takeover in Germany these days is risky business -- especially when you hope it fails. Schaeffler KG, a German ball-bearing maker, in August low-balled an agreed public offer for 49.9% of tire and brakes maker Continental AG.
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Very bitter, very public resistance against Schaeffler by Continental led to the compromise agreement, and a tiny premium was to ensure that not many shareholders would support Schaeffler, who'd already lined up about a third of the target through derivatives. But then global markets tumbled. On Monday, Schaeffler said it had ended up with 82.4% of Continental. Now it will have to peddle the surplus shares.
Schaeffler had been following what has become known as the Porsche strategy, where the sports car maker last year intentionally launched an unsuccessful offer for Volkswagen AG so that it could acquire up to 49.9% of its parts supplier in peace.
Once seen as a revolutionary loophole in Germany securities regulations, falling markets are quickly making the Porsche strategy a risky lemon. - Andrew Bulkeley
TheDeal.com: Schaeffler, Continental call truce (subscription required)
