BenQ Corp.'s Failed Acquisition of Siemens' Mobile Devices Division

            
 
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Case Details:

Case Code : BSTR250
Case Length : 17 Pages
Period : 2005-2006
Pub Date : 2007
Teaching Note :Not Available
Organization : BenQ Corp. and Siemens AG.
Industry : Telecom
Countries : Worldwide

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Introduction Contd...

In June 2005, BenQ acquired the entire mobile division which comprised the company's manufacturing units in Germany, Brazil, and China. However, the acquisition brought a range of problems for BenQ. The company failed to turn around the bleeding German unit, which incurred losses of € 840 million within a year and threatened to destabilize the parent company.

The loss was attributed to BenQ's lack of management and marketing experience as well as to the tough German labor laws that prevented BenQ from laying off people. Consequently in September 2006, BenQ Mobile filed for insolvency.

This affected around 3,000 German workers who were abruptly asked to leave without any compensation. The labor issue attracted widespread criticism against BenQ and Siemens, with German labor leaders and politicians alleging that BenQ's acquisition of the Siemens' mobile division was a carefully scripted plot by the two companies to avoid compensation payments to the workers, which ran into millions of euros.

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Background Note

Siemens

In 1847, Werner von Siemens established the Siemens & Halske Telegraph Construction Company in Berlin. The company laid several long distance telegraph lines in Europe.

The company grew over the years and diversified into cable works, light bulbs, electric railways, and electric streetcars. In 1897, it became a stock corporation under the name Siemens & Halske AG. In the 1920s and 1930s, the company developed several products including radios, automatic traffic lights, multi-purpose electric locomotives, and television sets. In this period, it also constructed a hydroelectric power plant in Ireland and a plant to manufacture electro-medical equipment in Erlangen, Germany. In the 1950s, the company started manufacturing ultra-pure silicon, cardiac heart pacemakers, electronic control systems and computers. In 1957, it established an electric appliance department to manufacture washing machines and spin dryers...

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