Merkel’s Cabinet approves legislation to stop Porsche-style stealth takeovers

Article by Christian A., on September 26, 2010

Legislation was recently approved by the Cabinet of German Chancellor Angela Merkel, making stealth takeovers more difficult to pull off. One of the recent takeovers that this law would have been able to prevent was Porsche SE’s 2008 acquisition of shares in Volkswagen AG.

This law, which took two years to be approved, seeks to plug gaps in disclosure rules for stock options including swaps held by investors to build a position in companies. This provision helped Porsche’s bid to build a majority stake in Volkswagen as well as an attempt by Schaeffler Group to control tiremaker Continental AG.

These two bids later failed. German finance-industry groups, including the BVAI Alternative Investment Federation, said that this government measure won’t necessarily obstruct takeovers but it will increase transparency and aid investment strategies.

A copy of the draft bill shows that presently, disclosure applies only to common shares. In an interview, Frank Dornseifer, Bonn-based BVAI’s managing director, said, “It’s hard to argue against the basic logic of the legislation.”

He said that with rules widening, the insight for all market players are “amplifie[d]” and it doesn’t only involve executives at companies whose shares are “being bought invisibly.”

Since March 2008, Herzogenaurach-based Schaeffler has been gathering a position in Continental through equity swaps. When the stock plunged close to a three-year low in July of 2008, Schaeffler made a bid that Europe’s second-largest carparts maker was unable to ward off.

Then the financial crisis happened, burying Schaeffler in debt as it was stuck with more shares than it meant to purchase. [via Bloomberg]

Topics: porsche, germany

If you liked the article, share on:

Comments

Recommended

Is there anything more exciting than a spoiler? Well, for those who didn't know, there are those who have already seen the Mercedes-AMG Project One (in the flesh) way before...
by - April 25, 2017
Does the Honda Passport ring a bell to you? This was the first ever SUV that was sold by the Japanese automaker, but it was not that successful compared with...
by - April 25, 2017
Wagon buyers who prefer their vehicle to be luxurious, you will have an entirely brand new selection at the latter part of this year. Porsche will start rolling out 4...
by - April 25, 2017
McLaren rejects the idea of creating anything other than a sports car. That means that vehicles that would be ideal for families such as an SUV or a crossover are...
by - April 25, 2017
The new and improved Opel Grandland X is out, and this large SUV is something the European market did not know they would need. Now measuring at 14.7 feet (4.48...
by - April 25, 2017
Facebook

Youtube Channel

Tip Us
Do you have a tip for us?
Did you film an important event?
Contact us
Newsletter
Subscribe to our newsletter!
Subscribe
Galleries