Porsche has raised stake in Volkswagen from 27.4% to 31%

[PanterroR]

Re: Porsche to raise stake in Volkswagen from 27.4% to 31%

Ok now someone with balls in PAG should take a decision and convert all Audis to RWD only brand

Bingo!!!

 

[EnI]

Re: Porsche to raise stake in Volkswagen from 27.4% to 31%

Yeah, I read that, but does that mean borrowing? Sorry... My financial knowledge is practically non-existent...

Yes, PAG will borrow most of the money (35 billion Euros) from the above mentioned banks.



Btw, today the main reason for PAG's takeover of VAG was revealed.

PAG CEO Weideking said to German daily paper "Bild" it was expected "VW law" to be declared by EU court as not being consistent with EU law. As an aftermath of such judgement VAG would be open to hostile takeover by hedge funds which had intentions to divide VAG into separate brand entities / companies (Audi AG, Bentley Motorcars, Labmorghini SA, Seat AS, etc) and sold those companies separately one-by-one to different buyers - making a huge deals, and big profits. Wiedeking also said PAG was strategically linked to VAG (eg some development cooperations: eg: hybrid, some platform parts, some purchasing etc) it would hurt PAG a lot if VAG was devided & sold to third parties. So to prevent such scenario PAG had decided to acquire VAG.




So, like I said: to prevent possible hostile takeover PAG is FORCED to acquire VAG since PAG is dependent on some VAG resources / cooperation deals.

And it is never a good thing when you are forced to do something. This takeover will be a huge financial burden for PAG. An up to 35 billion Euro loan just to finance such deal. Meaning PAG profits will be lower due paying off the loan.

And here comes the irony: it was PAG who challenged the VW law on EU court. So, the consequence is to assure controlling 25% stake PAG is now forced (driven by paranoia, or perhaps even rational fear of hostile takeover) to acquire entire stake in VAG.

Another bad move by Piech?

 

[bmer]

Re: Porsche to raise stake in Volkswagen from 27.4% to 31%

I'm trying to imagine what we would see if Porsche could use a few billions more on R&D instead of buying VW shares...

 

[Yperion]

Re: Porsche to raise stake in Volkswagen from 27.4% to 31%

Ok now someone with balls in PAG should take a decision and convert all Audis to RWD only brand

Who needs RWD when you can have AWD? BMW themselves also sell cars with AWD (xDrive).

 

[EnI]

Re: Porsche to raise stake in Volkswagen from 27.4% to 31%

I'm trying to imagine what we would see if Porsche could use a few billions more on R&D instead of buying VW shares...

Exactly.

And imagine BMW & Daimler-Benz without spending money on fiascos like Rover & Chrysler.

All these deals (VAG, Rover, Chrysler) looks like a tax on success: PAG, BMW & DB paying for being too successful.

 

[Imhotep Evil]

Re: Porsche to raise stake in Volkswagen from 27.4% to 31%

How about this:


German corporate law states that once a company (ie Porsche) acquires a stake of 30% in a German company (VW) the buyer has to launch a compulsary takeover bid, although that bid does not have to succeed.

As Porsche wants to bump it's stake to 31% (VW would then be secure, as Lower Saxony and Porsche would have a combined stake of 51%) it too has to launch a takeover, but it doesn't want to have to buy all of VW when it can cement control without paying as much by simply taking a majority stake.

But, to get over the 30% barrier, Porsche will HAVE to launch a takeover bid, but they are doing one that prices VW shares at 100 Euro each, where they are trading at around 120 Euro each. Porsche is hoping (and expecting) that most shareholders will reject the bid as too low, so they won't sell and Porsche won't have to buy the whole company, and will be able to just raise their stake to 31% (there is no other compulsary takeover law until 50% is reached. However, in the unlikely event that some shareholders sell, Porsche is obliged to buy so they have gotten a line of credit just in case they have to buy some shares.

 

[EnI]

Re: Porsche to raise stake in Volkswagen from 27.4% to 31%

How about this:


German corporate law states that once a company (ie Porsche) acquires a stake of 30% in a German company (VW) the buyer has to launch a compulsary takeover bid, although that bid does not have to succeed.

As Porsche wants to bump it's stake to 31% (VW would then be secure, as Lower Saxony and Porsche would have a combined stake of 51%) it too has to launch a takeover, but it doesn't want to have to buy all of VW when it can cement control without paying as much by simply taking a majority stake.

But, to get over the 30% barrier, Porsche will HAVE to launch a takeover bid, but they are doing one that prices VW shares at 100 Euro each, where they are trading at around 120 Euro each. Porsche is hoping (and expecting) that most shareholders will reject the bid as too low, so they won't sell and Porsche won't have to buy the whole company, and will be able to just raise their stake to 31% (there is no other compulsary takeover law until 50% is reached. However, in the unlikely event that some shareholders sell, Porsche is obliged to buy so they have gotten a line of credit just in case they have to buy some shares.

Yes, that's a plan. But ...

When "VW law" falls - and it is expected it will fall - hedge funds will be very interested in VAG due to its brands portfolio. And this scenario is VERY POSSIBLE. And in this case PAG will be forced to raise price for VAG - even well above €130. And this will be a black scenario for PAG. So, PAG has 3 alternatives:

1. Stay at 31% & hope hedge funds won't take actions - best alternative for PAG, but that is very unlikely since hedge funds won't stay inactive

2. Buy entire VAG at €120-130 per share - the safest way, but very costly

3. Wait till hedge funds take actions, and carry out the takeover at that time: but in this case VAG shares can significantly exceed the price €130 per share - the worst scenario for PAG since there will be a bidding war and PAG will be forced to pay A LOT for VAG


All alternatives are very risky, and none is comfortable for PAG.

I'm sure many lobbying, pressuring, speculating is going on at backstage. Many different interests involved. PAG should be very careful!

I'm very curious what the outcome will be.

 

[vabboud]

Re: Porsche to raise stake in Volkswagen from 27.4% to 31%

it will be inetresting if this ends up with the dissolution of VW, can any of its brands survive alone? where would they fit in the existing automotive world?
could porsche end up bringing itself down and VW along with it?
we have some very turbulent months ahead of us!

 

[EnI]

Re: Porsche to raise stake in Volkswagen from 27.4% to 31%

it will be inetresting if this ends up with the dissolution of VW, can any of its brands survive alone? where would they fit in the existing automotive world?
could porsche end up bringing itself down and VW along with it?
we have some very turbulent months ahead of us!

Bentley ... I'm sure BMW Group would be interested.

Lamborghini, Bugatti, Bentley: just like AM very desirable brands for private investors

Seat: I'm sure Chinese automotive companies would be VERY interested - to access Euro market with Seat help (established brand, established dealr network etc)

Audi: Chinese, Hyundai, Nissan-Renault, perhaps even PSA (Peugeot)


I'm almost certain some hedge funds interested in VAG have already approached some potential interested buyers of specific brands in VAG's portfolio. And I'm sure there is an interest for such deals, and hedge funds WILL take actions when VW law falls.

Poor PAG.

 

[Imhotep Evil]

But, won't Porsche still have enough voting power ?!
They could do this and then slowly buy till ~50%.

 

[EnI]

But, won't Porsche still have enough voting power ?!
They could do this and then slowly buy till ~50%.

25% + 1 share is a controlling stake - with such stake (and equivalent voting rights) you can block any important decision in company. So in the worst case scenario hedge funds acquire more than 25% of VAG - blocking PAG's control in VAG: perhaps even "blackmail" PAG - eg. "we'll stop blocking you & will sell our VAG stake to you, only when you sell us one of the brands eg Bentley / Lambo / Audi etc."

Not likely, but theoretically possible. But - will PAG take such risk, do nothing & wait?

So PAG has to get at least 75% + 1 share to get complete de iure & de facto control in VAG.

 

[Centurion]

I have totally avoided this thread because I'm concerned about Porsche's future. I'm well aware of the fact that they have to protect their partnership and history with VW but if they take control over VW I'm afraid VAG+PAG will become the new GM with lots of cannibalization. Porsche will be the biggest loser but Audi, Lamborghini and Bugatti will also be heavily affected. Further more the three brand already have problem with creating cannibalization free products. I'm very worried.

 

[Brendan Moore]

I have totally avoided this thread because I'm concerned about Porsche's future. I'm well aware of the fact that they have to protect their partnership and history with VW but if they take control over VW I'm afraid VAG+PAG will become the new GM with lots of cannibalization. Porsche will be the biggest loser but Audi, Lamborghini and Bugatti will also be heavily affected. Further more the three brand already have problem with creating cannibalization free products. I'm very worried.

I have similar concerns. Porsche is a great company, but can they effectively run a company as large as Volkswagen? It's a bit like the minnow swallowing the whale.

 

[Centurion]

I have similar concerns. Porsche is a great company, but can they effectively run a company as large as Volkswagen? It's a bit like the minnow swallowing the whale.

Exactly not only that but VAG is a getting too big for it's own good. A good number of their brands compete in the same market and the low end ones are forced to be held back in order to protect the prestigious brand. VAG is already having problem with this, a good example is the R8 which was given a "weak" engine in order not to eat into Gallardo sales. Thanks to those cars there is almost no way that Bugatti can launch a 150k mid-engined car without stirring things up even more. If Porsche joins the gang they won't be able to create a mini-CGT with biting themselves in the ass.
These are just a few of the examples of problems VAG are facing and neither good for the owners nor the brands.

 

[Brendan Moore]

Exactly not only that but VAG is a getting too big for it's own good. A good number of their brands compete in the same market and the low end ones are forced to be held back in order to protect the prestigious brand. VAG is already having problem with this, a good example is the R8 which was given a "weak" engine in order not to eat into Gallardo sales. Thanks to those cars there is almost no way that Bugatti can launch a 150k mid-engined car without stirring things up even more. If Porsche joins the gang they won't be able to create a mini-CGT with biting themselves in the ass.
These are just a few of the examples of problems VAG are facing and neither good for the owners nor the brands.

Plus - there is the issue of whether Piech will do what's right for Piech's huge ego or what's right for VW. If what's right for Piech and what's right for VW coincides, then, no problem. If what's right for Piech and what's right for VW diverge (has to happen at some point), then I think Piech will choose Piech over VW and simply fabricate the many reasons why it is also right for VW.

I hate to say it as I have nothing against Piech personally, but I fear that this is the reality.

 

[Imhotep Evil]

Piech is an irational, power hungry, won't-let-go and dangerous maniac. Sometimes I think an instutute for the not so healthy mantaly people would be more appropriate for
him.

 

[Bartek S.]

Porsche’s Stake In Volkswagen Goes To 31%
The AIADA newsletter reported that Germany’s financial regulators have approved automaker Porsche’s required takeover offer for Volkswagen, which it was obligated to make after acquiring more than 30% in the company, Porsche said Monday.

Porsche has said it doesn’t plan to acquire Volkswagen outright. USA Today reports that Porsche has improved its offer for preferred shares to 65.54 euros each from 65.45 euros. It is still offering 100.92 euros per ordinary share, which is more than 11% below the current market price.
Porsche triggered the mandatory takeover offer by raising its stake in Volkswagen higher than 30% — a move aimed at shielding the automaker from the possibility of a foreign takeover. The offer gives the company the chance to buy Volkswagen shares without making another takeover bid.
A German law that limits Volkswagen shareholder voting rights to a maximum of 20%, no matter how many shares are held, is expected to be ruled unlawful by the European Union. That ruling would have left VW exposed to takeover attempts. But with Porsche now holding 31% of the company and the German state of Lower Saxony a near-20 stake, the carmaker is now shielded.

 

[Deutsch]

With Porsche's backing, all of VWAG is sure to have a long and proserity filled future, though there maybe some drastic structural changes to come.

 

[Bartek S.]

VW rejects Porsche's takeover bid

When Porsche decided to exercise its option to purchase more VW stock, its stake was raised to over 30%. That triggered a German law that required the low-volume luxury automaker to launch a bid for all outstanding public shares of Europe's largest automaker. Usually when one company wants to take over another, they offer a stock buyout price that is equal to or greater than the actual market value, but Porsche only offered 101 Euros, even though the stock is trading at about 112 Euros.
VW shareholders unanimously rejected Porsche's offer, citing the offer price wasn't equal to the value of the company. We don't know how much Porsche really wanted to own all of VW, but we're sure they like the fact that they earned $2.75 billion last year due mostly to their partial ownership of Volkswagen.
VW rejects Porsche's takeover bid - Autoblog

 

[donau]

Looks like the events are progressing according to PAG plans. Good for them: No need to stretch the credit and it will allow them slowly to keep increasing their stake to 50% + 1 share, at which time they'll probably do a similar bid that will also fail, and by then the objective has been accomplished.
Even though there will be other controlling shareholders at that time, I believe 50% + 1 share will be sufficient to comfortably keep those other shareholders in check.