Study 3: How a Good Bidder Becomes a Good Target – The Case of Continental AG Acquiring Siemens VDO
On July 25, 2007, after almost half a year of weighing strategic and financial alternatives, the technology conglomerate Siemens AG agreed to sell its automotive supply division (“Siemens VDO Automotive”) to the German-based automotive supplier Continental AG. At a value of EUR 11.4 billion (USD 15.7 billion), this acquisition represented the largest in Continental's corporate history as well as in the automotive supply industry up to that date. The combined firm ranked among the five largest automotive suppliers in the world, within reach of the few industry leaders. From the perspective of its management board, engaging in this significant transaction carried an opportunity not only to realize synergy potentials, but, more importantly, to meet industry trends by expanding Continental's market position, by increasing its innovative abilities and by balancing its product portfolio across multiple product segments (Continental (2007a)). At the time of its announcement, the transaction appeared to be a reasonable strategy to prepare Continental for future market challenges.
KeywordsAbnormal Return Announcement Return Positive Abnormal Return Good Bidder Private Equity Firm
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