M&a Case

2) The Employees' stake in Spiegel was held by MKG, a limited partnership. Any employee of Spiegel-Verlag who had been with the company for atleast three years could join in as a "silent" partner. The partners, who were currently about 800, had the rights to share in the Spiegel's annual profits and to elect their executive board. At their entry, silent partners paid an individual contribution in the form of a loan to the MKG. In a revolving model, the new loans went in to paying down the principal and interest expenses of previous employee loans, and long standing members got their money back with a 4% interest after 18 years. Any employee leaving Spiegel would get his or her principal and accrued interest back, but lose his or her membership and profit participation rights.

Every year in spring, MKG's share of Spiegel's profits were distributed to the partners. A first art was evenly divided per head. A second part was allocated in proportion to each partner's initial contribution. Aiming for a "socially correct" model, individual contributions were determined using a sophisticated point system that had both social and performance components.employees got three points for each work year, and another point for 511 euros of annual salary, to a maximum of 198 points(of which 144 were salary). Until the age of 55, the MKG partners and use 30% of their dividend for age old provisions, another 25% for taxes, and 10% went back MKG as a loan pool.

3) When Rudolf Augstein died at the age of 79, his four children inherited their father's 25% ownership stake in Spiegel. However, Rudolf's death also triggered the sunset provision in the bylaws that gave G+J and the MKG the right to acquire an additional 0.5% each from Augstein's heirs. In 2004, G+J bought their respective 0.5% stakes from the Augstein heirs for a combined price of about 5 million euros, well above its pro-rata share price of Spiegel's equity value. According to the press, G+J's experts had estimated Spiegel's total enterprise value to in 2001 to be around 650 million euros, not

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