Bailout Takeover

  

How many Porsches do you see on the road every day? How many Volkswagens do you see? Porsche is a high-end brand that was seeing a slipping share of automotive sales. Continued slippage would have ended the car brand entirely. Yes, Porsche was, in fact, going bankrupt. VW is/was pretty steady Eddie, but didn't have a high-end sports car. They wanted one...like, who doesn't want a Porsche?

In 2012, VW bought 50.1% of Porsche. Progress report: By 2017, Porsche set a sales record for the sale of Porsche models worldwide. With 237,788 Porsche cars sold worldwide, including a record number of 911 models, Porsche seems healthy. Now VW...that diesel faux pas didn't help.

The VW/Porsche merger represents a bailout takeover. A more profitable or stable company obtains control of a financially troubled company to turn around its situation. In a bailout takeover, stronger entity takes over the weak company, in total by purchasing all existing shares...or in part by purchasing a controlling portion of shares, 50+%.

Related or Semi-related Video

Finance: What is Balance of Trade?14 Views

00:00

Finance a la shmoop... what is balance of trade...up, down, up, down yeah all right [Squirrels riding a see-saw]

00:10

think of balance of trade the same way you would think of that seesaw in your

00:14

schoolyard instead of the big-boned third-grader

00:17

weighing in against the you know waiting to grow kindergartner when it comes to [Ship sailing out of harbor]

00:21

international economies and the goods they buy and sell from into each other

00:25

we have exports this guy and imports this guy if two countries have a balance

00:30

in trade well then the financial weight on this seesaw thing here is even the

00:35

three future NFL linemen weigh about the same as eleven future tax auditors yeah [Linemen players and tax auditors in a see-saw]

00:41

but that's rarely the case when countries trade among each other

00:45

and if you're on the seesaw you want to be heavy like fat with feet firmly

00:50

planted on the ground where you are exporting or selling to another country [Goods travelling to foreign countries]

00:54

a whole lot more stuff than you're importing what you want is to be

00:58

collecting boatloads of their currency or oil or velcro kilts from Scotland and

01:04

as you capture more and more of their trade or wealth [Wealth sucked into the US]

01:08

the powerful imbalanced one well that'd be you here you get to have more and

01:13

more influence on them and the world they live in is there a way to gain this

01:18

system cheat? well sorta yeah politicians and governments get very nervous when

01:23

the balance of trade is not in their favor and they have the ability to pile [Imports and exports pile on a see-saw]

01:26

a bunch of books on their side of the seesaw to help their skinny accountants

01:31

compete better how do they do this magic you ask okay yeah we know you didn't ask

01:35

but we'll tell you anyway they smack a tax on goods they import from you like

01:41

the US government in the middle of our loss of dominion over the auto industry [Auto industry logos land in a seesaw]

01:45

to Japan and Korea and Germany well we placed a big fat tax on foreign cars

01:50

being imported into the US and we still lost the war there so yeah the seesaw ie

01:56

the balance of trade isn't always fair and by the way if you ever see this guy

02:00

coming run at least feed him [Man running in a park]

Up Next

Finance: What is Activist Investing?
11 Views

What is Activist Investing? Activist investing is done with the goal of actually implementing change at a company by buying so many of its shares....

Finance: What is a Bailout?
15 Views

What is a Bailout? Bailouts happen when a company is suffering huge losses and is about to go out of business. Some entity gives the failing compan...

Finance: What is Disinvestment?
3 Views

What is Disinvestment? Disinvestment is essentially a $5 word for sell off. It usually refers to a company liquidating aspects of its asset portfol...

Find other enlightening terms in Shmoop Finance Genius Bar(f)