You are invincible, but you must defeat the enemy.

Abstract: Since 5438+ 10 in June, 2005, Porsche has launched the acquisition plan for Volkswagen, which has aroused widespread concern. Overthrowing the "Volkswagen Law", obtaining the approval of the European Union, and increasing the shareholding of Volkswagen with huge loans, all plans are being implemented steadily. I thought this operation would be a classic case of "snake swallowing elephant", but the merger negotiations finally ran aground. Instead, Volkswagen bought Porsche for 4 billion euros. Is this sudden change in wind and rain due to the economic crisis or other reasons? This paper will make an in-depth analysis of this.

Keywords: Porsche; Volkswagen; Acquisition; corporate governance

June, 5438+October, 2005 10, after acquiring 8.27% of the shares of Volkswagen, Porsche announced that it would become the largest shareholder of Volkswagen, which kicked off the plan to acquire Volkswagen. In the following years, Porsche steadily pushed forward the plan-first, it sued the "Volkswagen Law" in Europe, and won the case in June 5438 +2007 10, overturning the 47-year law and paving the way for the acquisition; Subsequently, in July 2008, it was approved by the European Union and had actual control over Volkswagen. In March 2009, Porsche announced that it had obtained a loan of 654.38+654.38 billion euros from Bank 05 for the acquisition of Volkswagen shares.

The incident is developing in the direction expected by Porsche, but the arrival of the economic crisis has broken the original balance. With the sharp decline in business volume, Porsche's share price appeared a "roller coaster" market, the company's capital chain was in jeopardy, and the "Snake Swallow Elephant" acquisition case entered a white-hot stage. The subsequent development surprised many people. After the Porsche negotiations ran aground, Volkswagen quickly announced the acquisition of Porsche for 4 billion euros, which wrote an "anti-takeover" ending for this acquisition. Why did Porsche fail at the last minute? Is it only because of the external shock brought by the economic crisis? Or is there another reason? Below we will make an in-depth analysis from both internal and external aspects, and put forward the enlightenment brought by this failed acquisition to the enterprise.

One is the impact and influence of the external environment.

In the process of Porsche's attempt to acquire Volkswagen, the influence of external environment always existed, which set obstacles for the enterprise and directly and indirectly led to the failure of the acquisition.

(A) the existence of "mass law"

The popular law was established in 1960. By restricting shareholders' voting rights in Volkswagen, it ensures that Germany's largest automobile company is free from the threat of hostile takeover by foreign capital. For a long time, the government of Lower Saxony, where the public is located, once appeared as the "protector" of the public. Lower Saxony holds 20% of the shares of Volkswagen and has two seats on the supervisory board of Volkswagen. This law has set a serious obstacle for Porsche to acquire Volkswagen. Although on June 23, 2007 10, the European Court ruled that it was illegal for the implementation of the Law on the Mass to restrict the free flow of capital in the European market. It seems that the ruling paved the way for Porsche to acquire Volkswagen, but from the later development, the resolution did not play an essential role. The new Volkswagen Law promulgated by the German legislature still retains the veto power of Lower Saxony to protect German Volkswagen from hostile takeover. It can be said that Porsche's acquisition of Volkswagen still faces a huge gap and has not been fully recognized in law.

(B) the sudden arrival of the economic crisis

Porsche, which holds 20% of Volkswagen's shares, has been focusing on the acquisition of Volkswagen, and has successively completed a series of key steps such as increasing its shareholding, abolishing the Volkswagen Law, and the European Union approving Porsche's acquisition of Volkswagen. It can be said that the acquisition has reached the countdown stage. Unexpectedly, unexpected things will happen in the future. At the closest time to success, Porsche, which was affected by the economic crisis, inevitably fell into financial difficulties. In June, 2008, Porsche said that the profit in the first three quarters decreased by 65,438+05%, mainly because the global economic crisis led to the decline in demand for new cars, and unsatisfactory sales became an important trigger for the outbreak of Porsche's financial crisis.

(3) The China market has provided a solid backing for the public.

In the first half of 2009, Audi AG (China) and its two joint ventures, Shanghai Volkswagen and FAW-Volkswagen, delivered 652,222 vehicles to customers in China (from 1 to 53 1 and 6 12 in June 2008), with a year-on-year increase of 22.7%. In the first half of 2009, the growth of Volkswagen's automobile delivery volume was consistent with the growth of the overall automobile market in China, and the market performance reached expectations. The revitalization policy of China government has brought positive influence to the automobile industry. In 2008, Volkswagen's sales in China exceeded 6.5438+0 million vehicles for the first time, exceeding the three-year "Olympic Plan" ahead of schedule and becoming the fastest-growing market for Volkswagen in the whole year. Good sales performance makes Volkswagen stronger, which can not only resist Porsche's acquisition plan, but also use commercial operations to acquire Porsche.

External environmental factors do have an important impact on the acquisition, but this is obviously not the most fundamental reason, and the deeper factors should be excavated from within the enterprise.

Second, the internal governance failure of Porsche is the root cause of failure.

(A) high-risk financial policies triggered a financial crisis.

Porsche adopts the policy of buying Volkswagen shares to expand its shareholding ratio, and its main source of funds is corporate credit. By March 2009, the company announced that it had received a bank loan of 654.38 billion yuan to purchase shares. At the beginning of the acquisition, Porsche made a lot of profits. When Volkswagen's share price exceeded the highest point of 65,438+0,000 euros, it gained billions of dollars in excess income. However, with the arrival of the economic crisis, it has evolved into a global economic crisis, and Volkswagen's share price has also fallen all the way. When Volkswagen's share price fell below 250 euros per share, less than a quarter of the highest point, Porsche's previous profits on stock investment had been exhausted and there was no money to repay the bank loan. By June 2009, Porsche had taken on more than 654.38+0 billion loans, which had a huge negative impact on the company's finances and was eventually reversed.

(B) short-term incentives and long-term incentives are not balanced.

Incentive measures play an extremely important role as the driving force to promote the growth of enterprises. Incentive methods are usually divided into material incentives and spiritual incentives, and are divided into short-term and long-term in time. Porsche did not strike a balance between short-term incentives and long-term incentives, which led to the short-term behavior of corporate agents, and indeed achieved good returns for a period of time, but in the long run it led to the failure of subsequent acquisitions.

As the CEO of Porsche, Wei Dejin hopes to make Porsche the largest manufacturer in the global automobile industry before the end of his term, so as to achieve his successful goal. So, he planned this plan to buy Volkswagen, regardless of the company's cash flow and financial resources, and borrowed a lot from banks in an attempt to "swallow the elephant with a snake." This radical approach has brought great risks to the company's finances. After Porsche acquired the 5 1% stake in Volkswagen, it pushed up the share price of Volkswagen through other financial instruments such as options. Although before June 65438+1October 13, 2009, Porsche made a profit of 6.8 billion euros by holding the shares of Volkswagen, but on June 28, 2008 1005.0 1 euro, Volkswagen hit an all-time high price. The operation of these financial instruments brought huge profits to Porsche, but when Volkswagen's share price fell to 20. This can be said to be the failure of the company's incentive measures. It is precisely because Porsche did not take enough measures to integrate the interests of individuals and companies that Wei Dejin took such a big risk to buy Volkswagen and was bitten by the public.

(C) excessive trust in professional managers

It can be seen from Porsche's financial report that from 2005/2006 to 2007/2008, the long-term liabilities did not increase much, but the current liabilities increased by 540%, the financial expenses increased by 275%, the cash flow ratio decreased from 0.49 to -0. 13, and the asset-liability ratio remained at around 60%. These indicators indicate that Porsche is facing great debt repayment pressure in the short term. Of course, the company's management will pay attention to these financial data, but they have not raised any objection to this and have not taken any action to stop Wei Dejin's business behavior. The reason is that corporate governance trusts managers too much. Wei Dejin became CEO of Porsche on 1992. In his first few years in charge of Porsche, he successfully turned this bankrupt company into the most profitable automobile manufacturer in the world, and Porsche's profits hit a new high almost every year. It is precisely because of such good performance that Wei Dejin has a high prestige within the company. Porsche family members and corporate governance are obedient to him, and it is impossible to form effective supervision on him in essence.

Third, reflection on the failure of acquisition.

If you want to defeat the enemy, you must first consolidate yourself and control the initiative in your own hands, and then look for loopholes and offensive strategies from competitors' behaviors. Applied to this case, it reminds enterprises to improve their own governance, so as to face various crises and challenges and seek opportunities and acquisitions. In view of the reasons for Porsche's failure, enterprises should pay attention to the following aspects in their future development.