If you cheat, money will follow

A few days later, Zeng Xi told Chang Le a very unexpected news.

That is to say, after being introduced by Porsche Wolfgang, Mrs. Schaeffler, the head of the Schaeffler Group, and her son George will secretly come to Jiangzhou to discuss relevant matters with Leda Investment.

The so-called relevant matters are requests for help.

Why ask for help? A simple sentence is: if you take too big a step, you will lose your temper.

The beginning of this story also starts with the source Continental Group.

As a powerful automobile country, Germany has many spare parts companies, the most representative ones being Bosch Group and Continental.

These two group companies are both very strong in the field of spare parts, ranking first and third in the world respectively, but their styles are completely different and can be said to run counter to each other.

The development style of the Bosch Group is that of a technology nerd. It has been engaged in research for many years and continuously innovated technology through research and development, forming a monopoly advantage and gradually growing.

And Continental's development style is that of a young man, waving checks everywhere to buy, buy, buy!

Expand business lines through mergers and acquisitions, accumulate technology through mergers and acquisitions, and simultaneously expand asset scale.

Before the 90s, Continental was mainly famous for its Continental tires.

After entering the 90s, the situation changed.

In the late 90s, Continental acquired Teves to expand its research and development capabilities in chassis and braking technology.

After acquiring Teves, Continental launched a series of active safety technology products, such as active cruise, automatic emergency braking, blind spot warning, lane departure and other technologies.

This acquisition also marks Continental's first step into the automotive electronics business, and by the way expands Continental's business scope from Europe to North America.

In 2001, Continental acquired 60% of TEMIC, a professional electronics factory owned by Daimler Chrysler, and expanded its product range to include sensors, electric motors, and ESP businesses.

In 2006, Continental acquired Motorola's automotive electronics business for US$10 billion in cash, further strengthening its technology research and development capabilities in body electronics, sensors, power transmission and chassis control.

In 2007, Continental purchased Siemens VDO Electronics for a record 114 billion euros.

VDO Electronics is the world's leading supplier of automotive electronics and mechanical electronics. Its main products include automotive engine management systems, fuel injection systems, infotainment systems, navigation, instruments, interior lights, etc.

Among them, diesel common rail system piezoelectric injectors, ten-hole injectors, electronic valves, integrated starter generators and other products are in a leading position in the world.

Continental Group's acquisition of VDO Electronics has made it jump from fifth place in the world to third place in the world. The second place is Denso, and the first place is naturally Bosch.

Although Continental's series of mergers and acquisitions have greatly expanded the company's business lines and greatly enhanced the company's research and development capabilities in the automotive electronics business, they have also led to high debts and a financial crisis.

This gives Schaeffler Group an opportunity to take advantage of it. Schaeffler Group has always coveted Continental.

Schaeffler Group is a well-known bearing supplier worldwide.

It also has strong capabilities in automotive engines, gearboxes, chassis applications and high-precision products.

One year after Continental acquired VDO Electronics, in July 2008, Schaeffler Group, with the support of UBS, Royal Bank of Scotland, Commerzbank, Merrill Lynch and other banks, mortgaged the family shares. Borrowed 7 billion euros to acquire Continental.

Because of the premium acquisition, the company was very sincere and received support from the board of supervisors, shareholders, labor unions and other parties in addition to Continental's board of directors.

However, in order to avoid transferring debt risks, Continental forced Schaeffler to sign an "Investor Agreement".

The agreement clearly stated that Schaeffler Group promised to hold no more than 4% of Continental shares within 49.99 years of the contract being effective (Schaeffler Group holds 90% of Continental shares), and the excess shares should be held by a third party.

Schaeffler Group signed an agreement in order to make the acquisition smooth.

Then, in order to reduce financial pressure and quickly control Continental without defaulting on the contract, Schaeffler Group looked for strategic investors to receive excess shares.

The outbreak of the financial crisis not only hit the financial and banking industries hard, but also had a huge impact on vehicle manufacturing and parts supply. Auto sales fell sharply...

Schaeffler has been unable to find or cannot find new investment institutions to share the acquisition costs.

What's even more fatal is that Schaeffler's acquisition of Continental is itself a small business that makes it big. The company lacks strength and relies on banks and consortiums.

This method increases additional interest costs. Under favorable market conditions, it is still possible to complete the acquisition and then repay the debt through revenue.

But Schaeffler's predictions about market prospects and economic trends are too optimistic.

The lending bank obviously saw this and signed a gambling-like debt control agreement with the Schaeffler Group when lending money to the Schaeffler Group.

That is, Schaeffler must reduce its debt levels to a controllable and trustworthy level by January and December 09 respectively, otherwise the bank will have the right to dispose of the shares pledged by the Schaeffler family according to the agreement.

If it comes to this, the Schaeffler family will lose control of the Schaeffler Group, leading to the loss of family power.

To this end, Schaeffler Group applied to German officials for rescue and national credit guarantee capital injection.

The case for applying for rescue is strong.

Schaeffler Group and Continental Group are grasshoppers on the same rope. The two companies have 22 employees and thousands of supply companies.

If the two companies are in financial crisis, it will greatly affect the lives of 22 employees and their families, as well as the survival and development of thousands of supply companies.

German officials took it seriously and rejected the request for rescue, citing stronger grounds that involved moral hazard.

Officials will not use taxpayers' money to rescue a company with assets worth tens of billions of euros.

Therefore, Mrs. Schaeffler was helpless and on pins and needles.

Under Wolfgang's suggestion and recommendation, Mrs. Schaeffler could only take George across the ocean to a foreign country and apply for rescue from Leda Investment.

The above is the content of Zeng Xi’s report.

At the same time, she strongly suggested to Chang Le to intervene, as a white knight, to save the Schaeffler Group from the fire and water, and at the same time take away the shares it deserved.

"Boss, both Schaeffler Group and Continental Group are giants in the supply of spare parts. As long as we hold a certain share in the two groups and have the corresponding say, it will help Leda Automobile build a mature and stable supply chain. This will Both companies can provide mature and advanced product solutions."

"I know. But I'm worried that unlike Porsche, Schaeffler Group and Continental are the real core of the German automobile industry. Will the German official's attitude be clear?" Chang Le said.

"I don't think we need to worry too much. This time is different from Porsche. These two companies have been deeply in debt crisis due to excessive debt acquisition. In addition, the entire industry has also entered a downward channel. It is difficult for its own sales to absorb this huge debt. Without external funds, After entering, it is difficult to predict whether subsequent changes will be for the better or worse, and the German official should be able to see this." Zeng Xi is very confident about this:

"Furthermore, according to the latest news, five creditor banks, including UBS and Merrill Lynch, have forced the Schaeffler Group to take effective measures to control debt below 5 billion euros by January next year, otherwise They will dispose of the mortgaged shares. According to relevant data, Schaeffler Group's sales in the third quarter fell by 1 percentage points year-on-year, and there is a high probability that it will not improve in the fourth quarter."

"So, the situation is absolutely favorable to us?"

"Yes, boss. Now we have absolute dominance, and we can intervene or not. And the German officials will not reject a white knight with real money and spend money like water. In the Porsche case, they have a good impression of us."

"Okay, let's talk to them then. I suggest trying to hold as many shares in the two companies as possible to increase your voice."

"Understood, but the shares cannot exceed 20%, otherwise it will trigger a bad reaction."

"Then 20% will be used as the boundary. However, relevant technical support and parts supply must be clarified."

"Boss, don't worry. We are already making plans."