Two acrobats of finance are now overindebted

When Schaeffler had announced the launch of a hostile offer on Continental, last July, the first reaction, Germany, was the shock: an industrial family of Franconia region of Nuremberg, who buys the number five global automotive equipment, is this reasonable But the operation was quickly imposed as evidence. Through a mechanism of options allowing to bypass the statements of threshold imposed by the German legislation, Schaeffler is was already insured 36 of the capital. Accusations of Manfred Wennemer, who lived his last weeks at the head of Continental, sounded like a desperate gesture. The operation is "selfish, dismissive and irresponsible", was launched before the press. But the elected regional rejoiced that the company weakened by an award course in berne is purchased by a local rather than foreign flag industrial. Bafin, the German regulator, had with impotence this hostile takeover without premium on stock market. The German press gave winning Schaeffler, surely.

The manufacturer of ball bearings had before him an example of choice: two years ago, Porsche had become the star of the financial markets amount gradually to the capital of the first European automotive group, Volkswagen. With the same Tip: derivatives contracts signed with banks, to cover the target at a lower price. The manufacturer of sports cars and bought out a company whose staff... were 30 times higher. He was going to open up access to the capacity of research and development of the giant of Wolfsburg, while promising to put order into this business dominated by the IG Metall Union and the conflict of interest with the policies of Lower Saxony. You saw the sign of the power of the German family capitalism. This famous "Mittelstand", deemed conservative in financial operations, which, finally, afraid more risk-taking Anglo-Saxon.

This mix of genres did not recipe. As the events of the following month on the international financial scene would reveal the weaknesses of the "leverage" consumerism and short-termism. Having borrowed the methods of "hedge funds", Porsche and Schaeffler would face similar difficulties, even greater by the sharp fall in demand in the automobile. Two acrobats of finance are now over-indebted. They are currently struggling with their creditors, become more scrupulous in their funding agreements.

Schaeffler had launched its bid in September to 75 euros per share, in full panic on the markets. Investors had brought many more titles than expected. At the same time, stock market prices had been divided by two. Ecrasé under 10 billion in debt, the family group is committed to seek the assistance of the State in January. The answer of Berlin is: ask to save a company, obviously taking bad decisions.

For Porsche, the renegotiation of its credit lines ended on the knife's edge. End of March, the Stuttgart group should pay the 10 billion euro borrowed two years for the acquisition of Volkswagen. The refusal of the Land of Lower Saxony, 20 of VW shareholder, to get their hands on the cash flow prevented it. Consequence: Wendelin Wiedeking and its financial Director, Holger Härter, had to make significant concessions, according to the German press. In addition to higher interest and a pledge of VW options, it is question that Volkswagen buys out the operational activities of Porsche, who would become the tenth mark of the group. For now, the family clan Porsche denies this scenario. But if it is confirmed, it would reverse the balance of power in the first European car manufacturer (read also page 20).

Same pattern to Schaeffler. It does more with Continental merge, which would in this case the operational direction of the whole. Seems the sine qua non that Berlin provides State guarantees. Schaeffler family would reduce his participation for the benefit of creditors and should waive certain seats on the Supervisory Board. A "reverse take over" on a family business Obviously, Porsche and Schaeffler have no other salvation than their respective prey that they did not hesitate in bullying a few months ago. A believe that the Germany likes to explore new lands of financial engineering.