What is the ideal offensive strategy for when a smaller company attempts to take over a larger competitor? I’m thinking about when Porsche attempted to takeover Volkswagen and lost. What should Porsche have done differently in order takeover VW?
This is too wide of a question and has many answers. One way of doing so is analyze the equity ownership and understand their drive. This can lead to a move from the investors towards the transaction. Acquiring a good share of equity and lead to investor activism. carl Icahn has done this a number of times and has pushed for many deals to happen. Having an investor that champion the transaction will help but requires some patience and persistence.
In reference to Porsche’s attempt to take over Volkswagen I believe it was overall a very cleaver plan* for a hostile takeover put in place by Wendelin Wiedeking CEO & Holger Härter CFO, which would have surely worked if the 2008 financial crisis didn’t happen. The credit crunch prevented Porsche to reach the 75% mark, which under German law would have given them full control over the company and access its cash flow, which was “the true essence of deal: domination and profit transfer.” Porsche was just 0,9% short of reaching they goal!
Timing was the main reason they didn’t achieve the hostile takeover, and perhaps the only thing they should have done differently was to have a contingency plan against a financial crisis! Tough luck.
* The plan consisted of purchasing VW stocks including the use of call options. In turn the profits generated by such operation financed the actual share purchase.
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