On August 21, 2008 Continental accepted Schaeffler´s offer to become a majority shareholder of their company. Both companies signed an investment agreement, including the criteria that Schaeffler is not allowed to hold more than 49.9% of the total shares until 2012. Because of the lucrative offer to the former shareholders of Continental, they have tendered a total of 82.41% to Schaeffler that led to a total holding of approximately 90%. Therefore Schaeffler had to hand over 40% of those shares to banks. Since then, both companies are fighting the credit crunch, rising raw material prices and the financial/ automotive crisis with sharply decreased sales volumes. Currently both suppliers are working together on the first major strategic project, in order to make use of synergies including costs, knowledge and distribution. If Schaeffler will keep all of Continentals “exotic” business units like “tires” it will become an interesting strategic issue as soon as the management can make those fundamental decisions.
Table of Contents
1. ABSTRACT
2. INTRODUCTION
3. LITERATUR REVIEW
4. BACKGROUND
4.1 INDUSTRY INSIGHTS
4.2 CONTINENTAL CORPORATION - COMAPANY AND PRODUCT OVERVIEW
4.3 SCHAEFFLER GROUP - COMPANY AND PRODUCT OVERVIEW
5. THE HOSTILE TAKEOVER OF CONTINENTAL BY SCHAEFFLER
5.1 HOSTILE TAKEOVER
5.2 CHRONOLOGY OF THE TAKEOVER
5.3 PARTICULARITIES OF THE MINORITY SHARE TAKEOVER
6. STRATEGIC IMPLICATIONS OF THE TAKEOVER
6.1 CHALLENGES FOR COMPANIES IN MATURING INDUSTRIES
6.2 SCHAEFFLER´S STRATEGIC GROWTH DECISION ON A CORPORATE LEVEL
6.3 HORIZONTAL AND VERTICAL INTEGRATION OF BUSINESS UNITS
6.4 IMPACTS OF DIVERSIFICATION ON THE ORGANIZATION
7. POTENTIAL BUSINESS DEVELOPMENTS
8. CONCLUSION
Research Objectives and Themes
This paper aims to analyze the 2008 hostile takeover of Continental Corporation by the Schaeffler Group through the lens of strategic management. It examines the motivations behind the acquisition, the competitive environment of the automotive supplier industry, and the subsequent strategic implications for both organizations during a period of global economic turmoil.
- Strategic analysis of the hostile takeover process
- Industry life cycle and maturity phase challenges
- Corporate growth strategies: Horizontal and vertical integration
- Organizational impacts of diversification
- Post-merger synergistic potentials and financial restructuring
Excerpt from the Book
5.1 Hostile Takeover
Takeovers are usually divided into friendly and hostile, whereas a hostile takeover is generally considered as an unsolicited offer made by a potential acquirer that is resisted by the target´s management. Potential victims for a hostile takeover often use defense strategies in order to raise the overall cost of the takeover attempt and generate more time to install additional takeover defenses. Companies can use different defense strategies, either before the “bid”, like poison pills, shark repellants or golden parachutes or also “postbid” defenses like for example the greenmail practice. A target company seeking to avoid being taken over by a specific bidder may try to be acquired by another company, a white knight, which is viewed as a more appropriate suitor. (Donald DePamphilis 2005)
Summary of Chapters
1. ABSTRACT: Provides a summary of the takeover agreement between Schaeffler and Continental, the financial holdings, and the subsequent challenges faced by both companies.
2. INTRODUCTION: Outlines the turbulent state of the automotive supplier industry and the necessity for innovative business models in the face of financial crises.
3. LITERATUR REVIEW: Explains the reliance on press reports and academic strategic management literature to analyze the takeover events.
4. BACKGROUND: Details the industry maturity phase and provides company profiles for both the Continental Corporation and the Schaeffler Group.
5. THE HOSTILE TAKEOVER OF CONTINENTAL BY SCHAEFFLER: Documents the chronological events of the takeover and the legal peculiarities regarding minority shares and swap transactions.
6. STRATEGIC IMPLICATIONS OF THE TAKEOVER: Examines the rationale for integration, focusing on corporate strategy, value chain expansion, and diversification.
7. POTENTIAL BUSINESS DEVELOPMENTS: Explores the post-takeover efforts to realize synergies and future directions for the combined entity.
8. CONCLUSION: Assesses the success of the ambitious takeover in the context of global market constraints and technological advancements.
Key Terms
Hostile Takeover, Continental Corporation, Schaeffler Group, Automotive Industry, Strategic Management, Vertical Integration, Horizontal Integration, Diversification, Synergies, Financial Crisis, Stakeholder, Equity Swaps, Corporate Strategy, Market Maturity, Business Models
Frequently Asked Questions
What is the core subject of this research paper?
The paper focuses on the strategic management analysis of the Schaeffler Group's hostile takeover of the majority share of the Continental Corporation in 2008.
What are the primary themes discussed?
The central themes include the mechanics of hostile takeovers, industry life cycle challenges, corporate growth strategies like vertical and horizontal integration, and the impact of the 2008 financial crisis on automotive suppliers.
What is the main research objective?
The objective is to analyze the strategic rationale behind the acquisition and evaluate how the two companies navigated the takeover process and subsequent consolidation under harsh market conditions.
Which methodology is applied in this analysis?
The paper utilizes a qualitative analysis based on industry-specific literature, media reports, press releases, and established strategic management frameworks developed by academics like Wheelen and Hunger.
What does the main body of the text cover?
The main body covers the background of the firms, a detailed chronology of the takeover process, the legal aspects of swap transactions, and the strategic implications for the organization's structure and operations.
Which keywords define the work?
Key terms include Hostile Takeover, Corporate Strategy, Automotive Industry, Vertical Integration, Diversification, and Synergies.
Why was the takeover considered "hostile" at the start?
It was considered hostile because the offer from the Schaeffler Group was unsolicited and initially met with strong resistance from the management of the Continental Corporation.
What role did the 2008 financial crisis play in this takeover?
The crisis intensified the pressure on both firms due to falling demand, restricted financing, and rising raw material prices, forcing both companies to work together to realize cost and knowledge synergies.
How does the author explain the use of equity swaps?
The paper highlights that Schaeffler utilized cash-settled total return equity swaps to build a significant position in Continental shares without immediately seeking a formal majority stake, as mandated by specific takeover laws and change of control clauses.
- Citation du texte
- Swen Beyer (Auteur), 2010, Analyzing the takeover of CONTINENTAL by the SCHAEFFLER GROUP from a strategic management point of view, Munich, GRIN Verlag, https://www.grin.com/document/152749
