Squeeze to Infinity: Porsche's Attempt to Acquire Volkswagen

Description

The German financial market regulator (BaFin) had recently come under severe national and international pressure because of large market movements in Volkswagen stocks, caused by Porsche's announcement that it acquired a much larger than expected stake in the company. At one point, the firm had become the largest company in the world and, in one afternoon, its market capitalization was bigger than that of the entire car industry. In the blame game that followed, Porsche's management, the German market rules, London-based hedge funds and BaFin all bore the brunt of the blame.

Learning Objective

The main objective of the case is to expose students to short selling techniques and the characteristics of equity lending markets.

Keywords

Capital Market Financial Engineering Financial Instruments Financial Strategy Mergers and Acquisitions