When family-controlled industrial group Schaeffler shocked world markets by announcing it was launching a hostile takeover bid for tyre-maker Continental in 2008, few gave them much hope of pulling it off, writes Marc Smith.
Schaeffler, which was set up in 1946 when brothers Wilhelm and Georg Schaeffler started rolling bearings business INA, had a turnover of €9 billion compared with Continental's €26 billion.
How could a company nearly two thirds smaller than the firm it wanted to take over succeed?
But they did, managing to take a 75% stake in the famous tyre business in a convoluted series of share transactions.
Nevertheless, it was at a huge cost, with the family being labelled as gamblers who have speculated and lost, and saddled with €12bn debt in the process.
The complete takeover of Continental now looks a done deal.
Last week, Juergen Geissinger, the non-family chief executive of Schaeffler, told reporters that it would be ready for a merger between the two companies in late 2011.
So the Schaefflers might just have the last laugh.
"Schaeffler took over Continental at the peak of the market with money they did not have," said Joachim Schwass, professor of family business and entrepreneurship at the Swiss business school IMD.
"But having survived this crisis, the amazing pick-up of the automotive industry in the first half of 2010 gives them an opportunity to trade themselves out of a big hole. They now have a chance of to being vindicated if the automobile sector continues to pick up and expand, especially in China."
Indeed, as the world's economic recovery gathers pace, Continental has seen a staggering improvement – its consolidated EBIT for H1 2010 was up 901% to €1.01 billion.
Yet the situation remains a delicate one. The family, led by Georg Schaeffler's wife Maria-Elisabeth and her son, also called Georg (pictured), have taken risks with the 75% stake it has built up in Continental.
Perhaps it was with this in mind that Schaeffler announced in June that it was reorganising its structure by consolidating its operational businesses and stake in Continental under a new management holding company that is wholly owned by the Schaeffler family.
Schwass has mixed views on the restructuring.
"My sense it that Schaeffler sees light at the end of the tunnel and is navigating to save both companies, but at worst the family may have done this to enable an easy way to divest all or parts of their interests in Continental," he said.
"For the moment the creditors seem to be playing along as it is clearly in everybody's interest to benefit from the industry upswing."