Tuesday 5th May 2009

Porsche's VW Domination In Doubt

Arab investors could scupper Porsche's 75 per cent aims

---

Porsche’s hope of securing a 75 per cent stake in Volkswagen may be under threat after the head of the German State of Lower Saxony said he would welcome an approach from Arab investors.

Premier Christian Wulff told a German regional newspaper: ‘If an Arab investor bought a stake in VW, alongside Lower Saxony, Porsche and Piech, it would be welcomed.’

Further investment from outside parties would weaken Porsche’s stranglehold over VW. Porsche has previously stated its desire to control majority voting rights in Volkswagen by the end of the year, increasing its current 50.76 per cent stake in the company to the required 75 per cent threshold.

However, in a bizarre twist to the Porsche-VW power struggle, the dominant sports car manufacturer may end up selling control of its manufacturing business to Volkswagen in order to wipe clean the estimated €16bn debt of holding company Porsche SE.

That deal is due to be hammered out later this week, when the two parties are set to discuss the possible takeover of Porsche AG by Volkswagen.

The Piech and Porsche families, the owners of Porsche SE and Porsche AG, are both heavily exposed after investing nearly €23bn in their quest to acquire their 51 per cent stake in VW, but the heads of the families appear to be at loggerheads over the proposed sale of Porsche cars.

Wolfgang Porsche recently told a Frankfurt newspaper that; ‘Porsche AG will not be sold to Volkswagen.’ However his cousin Ferdinand Piech is thought to endorse the sale which could net the two families more than €11bn.

[louiebaby]

This is an interesting twist to the question of "What happens in June when Porsche's cash settled options on Volkswagen expire?"

(Well I find it interesting anyway...)

Keep up the commentary on the saga boys!

[Gridl0k]

So there's Porsche and Piech and Lower Saxony and Porsche SE and Porsche AG* and Abu Ali and....

My god, it's all made of stars!

• Please don't assume that anyone knows what the hell you're talking about...

[Fatbloke]

Confused


you will be


after next weeks episode of


Porsche

[louiebaby]

Fatbloke said:

Confused


you will be


after next weeks episode of


Porsche

Like Heroes, but without the cheerleader...

[rockystarr]

This is all getting rather silly....

[davemac250]

louiebaby said:

This is an interesting twist to the question of "What happens in June when Porsche's cash settled options on Volkswagen expire?"

(Well I find it interesting anyway...)

Keep up the commentary on the saga boys!

Not to mention if there is as allegation of market manipulation that sticks.

What happens when the cash options expire? If they haven't reached a finalised deal then the whole mess will implode around them.

[Frimley111R]

Is this saying that Porsche borrowed money to buy into VW but now can't pay back what it owes and so may have to sell the stake it has in VW?

[davemac250]

Sort of. Porsche has promised money.

If Porsche cannot raise that money it will forfeit the shares in VW, probably with a penalty.

One way it could raise the money would be to redeem some of the shares. They would then increase their VW holdings gradually.

Of course that is if someone wants to buy them. Is VW worth the share price at the moment? Probably not.

They are on the face of this story looking to raise the cash from reversing the deal and selling porsche shares into VW.

I don't know if this would work. The market they are trading on has some very (IMO) lax rules in this area. It is doubtful any of this could have happened anywhere else in the world.

And it all depends on the conditions attached to their option.

[jonnyb]

Porsche, VW to merge. According to the BBC: http://news.bbc.co.uk/1/hi/business/8037159.stm

[german tony]

Seems more like an extension of the long-running battle between the side of Ferdinand's family that run Porsche & the side that run VW & if somebody, hopefully the state of Lower Saxony, doesn't bang their heads together good & hard there is going to be tears before bedtime you mark my words.