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Sunday, November 8, 
2:24 pm

Porsche strategy a risky lemon in Germany

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Porsche in a showroomLaunching 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)





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