Porsche Rejects Volkswagen Offer To Buy Stake
FRANKFURT (Dow Jones)--The battle over the future of German sportscar maker Porsche Automobil Holding SE (PAH3.XE) escalated Monday when Porsche said it wouldn't consider the sale of a 49.9% stake to Volkswagen AG (VOW.XE) because it would then immediately have to re-negotiate a EUR10.75 billion credit facility.
Porsche spokesman Albrecht Bamler said Volkswagen had offered directly to supervisory board Chairman Wolfgang Porsche to buy the Porsche stake, but hadn't made the offer to the company's executive board, which would have to consider such a deal.
Volkswagen declined to comment.
The battle over Porsche and its holding in Volkswagen, Europe's biggest car maker by sales, is becoming increasingly acrimonious. Porsche has tried to acquire Volkswagen, building up a stake of 51% plus a complex set of options that would enable it to hike its stake by around 20% if exercised. But the credit crunch and the stock market collapse meant Porsche ran into financing trouble, and it is now in talks about a capital injection from the state-owned Qatar Investment Authority.
The company's net debt tripled to EUR9 billion when it built its VW shareholding, forcing it to abandon its plan to push for a 75% stake and gain access to Volkswagen's cash reserves.
It may now have to give up a stake in itself in return for an investment from QIA, or give QIA some of its VW options, or a combination of both.
All Porsche's voting rights are controlled by the Porsche and Piech families.
Volkswagen's powerful supervisory board chairman and former Chief Executive Ferdinand Piech, who also sits on Porsche's supervisory board, favors an outright sale of Porsche's core sportscar operations to Volkswagen to raise funds for Porsche.
Porsche would then be integrated as a tenth brand into Volkswagen along with nameplates such as Audi, Skoda or Seat.
But Volkswagen spokesman Michael Brendel Monday reiterated that VW hadn't issued an ultimatum to Porsche requiring it to agree to a merger of the two companies by the end of this month, after Porsche Saturday had said it rejected such an ultimatum.
"It appears that ... the relations ... between VW and Porsche have hit an all-time low," said IHS Global Insight analyst Tim Urquhart. "What was already a difficult negotiation is rapidly descending into farce," he added.
Porsche said last month that its owner families unanimously support the plan to get an outside investor on board to safeguard the company's independence.
The maker of models like the Cayenne and 911 said Friday that talks with QIA were nearing completion after the Qatari's completed due-dilligence and the result of that process was positive.
The histories of Porsche and Volkswagen have been entwined ever since Ferdinand Porsche designed Volkswagen's iconic Beetle in the 1930s. Volkswagen's supervisory board chairman Piech is the grandson of Ferdinand Porsche. Porsche's supervisory board chairman Wolfgang Porsche is Piech's cousin.
But the family ties have been tested frequently as Piech has made several controversial moves to maintain hisinfluence and forge a European auto empire offering vehicles ranging from the ultra-luxury Bugatti Veyron sportscar to Scania's heavy trucks.
Porsche Shareholder Says Won’t Be ‘Blackmailed’ by VW Ultimatum
By Brian Parkin June 27 (Bloomberg) -- Porsche SE supervisory board chief and shareholder Wolfgang Porsche said today that he will not be “blackmailed” into fulfilling an ultimatum to agree to a merger plan forged by Volkswagen AG. An ultimatum, reported today in the German press, from Wolfsburg-based Volkswagen and the state of Lower Saxony, are “damaging,” Porsche said in a statement sent to news organizations today. The reports said VW and the state have given Porsche until June 29 to agree to the plan.
VW, Porsche must agree on future soon: Lower Saxony
Mon Jun 29, 2009 11:43am EDT
FRANKFURT (Reuters) - Lower Saxony, Volkswagen's second-largest shareholder, again pushed VW and Porsche to break a deadlock in merger talks on Monday as the two German carmakers squabbled over a deal.
Disagreements among Porsche's owning families and questions about preconditions for an investment by Qatar have held up progress toward creating a combined company, people close to the negotiations said.
"We need to clarify now whether each will go his own way or whether there is a common solution," Christian Wulff, premier of the German state of Lower Saxony, said at in Berlin, adding the state and VW both saw the advantages of a deal.
Wulff said he felt a "certain irritation" after Porsche accused Volkswagen and Lower Saxony, which owns a blocking minority in Europe's biggest carmaker, of holding a gun to its head to agree a deal quickly.
"Apparently not all facts are known to everyone," he said.
Volkswagen and Lower Saxony deny making any ultimatum which Porsche chairman Wolfgang Porsche and his deputy Uwe Hueck said in a joint statement on Saturday was "detrimental to the entire cause."
Porsche said a document containing "deadlines" was sent to Wolfgang Porsche last week.
Porsche dismissed as unworkable any deal which involved a partial sale of its sports car business to VW, noting this would let banks call immediately a 10.75 billion euro ($15.0 billion) syndicated loan they awarded Porsche in March.
Porsche and Volkswagen have been in talks to create an "integrated" automotive group after Porsche's 9 billion euro debt burden forced it to drop plans for a full takeover of VW. Porsche owns a 51 percent stake of VW voting shares.
But progress toward creating a combined company stalled after Porsche chief executive Wendelin Wiedeking sought investment from sovereign wealth fund Qatar Investment Authority (QIA).
Porsche said last week talks with Qatar had "entered the final stretch" but it has so far failed to secure an agreement. QIA chief executive Hussein al Abdullah would not comment.
Qatar wants to learn more detail about combining VW and Porsche before committing to an investment in Porsche Automobil Holding SE, a person familiar with the talks said.
Key to any progress is the resolution of a dispute between the Porsche and Piech clans who own Porsche. Wolfgang Porsche opposes a sale of the Porsche AG sports car business to VW.
His cousin Ferdinand Piech, the chairman of Volkswagen, has in contrast been pushing for months for a sale of Porsche AG that would give the VW group its 10th brand.
VW is reluctant to continue talks with Porsche until the question of Porsche's Qatar investment is resolved, a person close to VW said.
VW finance director Hans Dieter Poetsch said this month that creating a combined VW-Porsche was "a demanding task. Important questions need to be resolved beforehand. We're seeking ways, if there are any, to build an integrated firm."
Porsche, Qatar Investment Talks Are in ‘Final Stage’
By Andreas Cremer
June 26 (Bloomberg) --
Porsche SE said talks with Qatar over a potential investment in the sports-car maker have entered a “final stage” as chances diminish that the German government will extend a loan.
The due diligence process conducted with the Persian Gulf state has led to a “positive” conclusion,
Frank Gaube, a spokesman for Porsche, said in a telephone interview today. He declined to predict when an agreement may be reached.
Daimler AG, the second-largest maker of luxury cars, denied a German magazine report that it’s seeking a stake in Porsche.
The maker of the 911 sports car may sell a stake for as much as 2.5 billion euros ($3.5 billion) to Qatar to help reduce 9 billion euros in net debt, people familiar with the plan said June 15. Stuttgart, Germany-based Porsche has applied for a 1.75 billion-euro loan from state-owned development bank KfW Group.
The Economy Ministry called off a meeting that had been scheduled for today in Berlin to discuss the application because German officials no longer see the need for a review after KfW rejected the loan request last week, people familiar with the situation said yesterday.
Porsche has been accumulating stock in
Volkswagen AG since 2005 to protect ties to the Wolfsburg, Germany-based automaker, which is its largest supplier. Porsche, which owns at least 50.8 percent of VW, also holds some call options that could be converted into about 20 percent of VW shares.
The automakers said in May they were in talks about creating an integrated manufacturer of 10 vehicle brands that would also include VW’s Audi luxury unit as well as the Skoda and Seat brands.
Daimler’s Plan
Daimler has no plans to acquire a stake in Porsche,
Thomas Froehlich, a spokesman for Daimler, said today, confirming comments Chief Executive Officer
Dieter Zetsche made in an interview with Welt am Sonntag newspaper.
“I don’t think it’s wise to consider replacing this integration” of Porsche and Volkswagen “by another one,” Zetsche was quoted as saying in an e-mailed summary of an article to be published by the Sunday newspaper.
The Manager Magazin reported last week that Daimler and Porsche had been in talks at the end of last month to discuss possible options, including Daimler buying shares in Porsche or receiving the VW options.
A spokesman for the Qatar Investment Authority declined to comment on talks with Porsche.
Geez, will this drama ever end?
Could that happen to Skoda as well (old VWs models rebadged to Skoda)?
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