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How Preussag Became TUI: A Clinical Study of Institutional Blockholders and Restructuring in Europe

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  • Ingolf Dittmann
  • Ernst Maug
  • Christoph Schneider

Abstract

Between 1997 and 2004, Preussag, a diversified German conglomerate of “old economy” businesses, transformed itself into TUI, a company focused almost entirely on tourism and logistics. We analyze how Preussag executed this change, and how the change contributed to Preussag's underperformance in the stock market. We find that only the divestitures created value, that the strategy to invest in tourism destroyed value, and that the acquisition premiums Preussag paid were mostly unjustified. The case shows how divestiture programs increase the liquid resources available to management and casts doubt on the positive governance role of institutional blockholders.

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  • Ingolf Dittmann & Ernst Maug & Christoph Schneider, 2008. "How Preussag Became TUI: A Clinical Study of Institutional Blockholders and Restructuring in Europe," Financial Management, Financial Management Association International, vol. 37(3), pages 571-598, September.
    • Handle: RePEc:bla:finmgt:v:37:y:2008:i:3:p:571-598
    DOI: 10.1111/j.1755-053X.2008.00025.x
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    2. Bremert, Michael & Schulten, Axel, 2008. "The impact of supervisory board characteristics on form performance," Papers 08-33, Sonderforschungsbreich 504.
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