Porsche/VW Saga

[Bartek S.]

VW to pay $11.28 billion for all of Porsche, report says - tables turned

Automotive News
July 18, 2009 - 12:01 am ET
UPDATED: 7/18/09 10:57 a.m. ET

FRANKFURT (Reuters) -- Porsche SE's controlling families will agree on Thursday to accept an offer by Volkswagen to buy its sports car business Porsche AG for roughly 8 billion euros ($11.28 billion), Der Spiegel reported on Saturday.

Germany's leading weekly magazine wrote that the rival Porsche and Piech clans, which own 100 percent of Porsche SE votes, will approve the two-stage takeover at a supervisory board meeting on July 23.
Volkswagen would purchase a 49.9 percent stake in Porsche AG and at a later date acquire the rest, in a deal that would create an integrated automotive group with 10 brands under the leadership of the Wolfsburg-based carmaker.

The sale would help Porsche SE pay off most of its debt, which two sources told Reuters has ballooned to considerably more than 10 billion euros.

Der Spiegel also said embattled Porsche SE and Porsche AG CEO Wendelin Wiedeking is negotiating over a severance package that could total more than 100 million euros. In the meantime, production chief Michael Macht will replace him as head of Porsche AG, the magazine reported.
On Thursday, Wiedeking rejected speculation he was about to leave the group.

Asked on Saturday whether the two families have reached a decision for the July 23 board meeting, Porsche spokesman Anton Hunger said "we have not been informed of one," adding that the Spiegel report was speculation that the company would not comment on.

Separately rival German weekly magazine Focus reported that Volkswagen's powerful chairman and part-owner of Porsche, Ferdinand Piech, plans to remove Wiedeking on Thursday from the influential six-man steering committee on the VW supervisory board.

The vacancy could open up the opportunity for Piech's cousin and rival, Wolfgang Porsche, VW supervisory board member and Porsche SE chairman, to replace Wiedeking in the committee as a representative of his side of the family.

The grandfather of Wolfgang Porsche and Ferdinand Piech was Ferdinand Porsche, designer of the Beetle and founder of Volkswagen.

autonews

 

[Giannis]

VW and Porsche slide on possible deal breaker

ANY deal to sell Porsche SE's sportscar business to Volkswagen could be scuppered by potential tax liabilities, a German newspaper reported overnight, knocking shares in the two German companies.

Sueddeutsche Zeitung cited sources close to Porsche's supervisory board as saying taxes of €3 billion ($5.2 billion) that would go along with any takeover could become a deal breaker.

Porsche and Volkswagen declined to comment on the report.

Volkswagen's ordinary shares were down 9.2 per cent to €227.03 in overnight trade, making them the biggest decliners on the German blue-chip index, while Porsche fell 7.9 per cent to €47.80 on fears its debt problem may not be solved.

There have been reports the Porsche family that controls a majority of Porsche SE will cave in to demands by rival family shareholder Ferdinand Piech to reduce the company's crushing debt by sacking chief executive Wendelin Wiedeking and selling the sportscar unit, Porsche AG, to Volkswagen.

Porsche, along with labor leader and deputy board member Uwe Hueck, has repeatedly denied reports that Wiedeking was negotiating for a severance package of over €100 million and a successor for his post as head of Porsche AG has been found.

The Sueddeutsche came ahead of board meetings at both companies in Stuttgart on Thursday that could determine the future of the two carmakers.

"Three billion euros is quite a bit of money and could put the entire business structure in question," a Frankfurt-based trader said.

German magazine Der Spiegel reported over the weekend that the Porsche and Piech families would agree on Thursday to accept an offer by Volkswagen to buy Porsche AG for roughly €8 billion.

Volkswagen would purchase a 49.9 per cent stake in Porsche AG and at a later date acquire the rest, in a deal that would create an integrated automotive group with 10 brands under the leadership of the Wolfsburg-based carmaker and its chairman, Ferdinand Piech.

Porsche SE needs to dig itself out of a debt hole and strengthen its negotiating position after its efforts to seize full control of VW - Europe's biggest carmaker - failed, leaving it with a stake of nearly 51 per cent.

But the Porsche and Piech families - which control all the voting shares at Porsche SE - have been at loggerheads for months over how to resolve its debt woes and the role Volkswagen would play in the whole deal.

The sale of Porsche AG would help Porsche SE pay off most of its debt, which German daily Bild reported had risen to €14 billion, citing an informed source.

A spokesman for Porsche denied the Bild report: "The figure is wrong."

Porsche has also been in talks on a deal with Qatar that would give the Gulf state a 20 per cent stake in Volkswagen via derivative contracts.

"A fully debt financed purchase of Porsche AG and (family owned auto dealer group) Porsche Holding GmbH for a total of €11 billion by VW, if true, would obviously be detrimental for VW's rating in the absence of any Qatar involvement (capital increase, call options)," said UniCredit credit analyst Sven Kreitmair.


Source

 

[EnI]

So, this is it?

It's a deal similar to the one from the few months ago: when it was directed from Porsche SE VAG had to buy Porsche AG (using VAG precious cash reserves, or getting new expensive loans - giving brands, real estates eg. for colaterales). A deal Piech wasn't fond of - saying Porsche SE should rid off the huge debt first, without exhausting VAG company.

But right now this will happen.

The only difference is Porsche SE will sell its VAG options to other investors (most of them to QIA).

What a mess ...

 

[NarutoRamen]

This sh!t is just getting ridiculous. I mean seriously, they just keep on adding new crap to this. What's next, another 4 billion for an automated ass scratcher? Really?

 

[Ultimate Car Guy]

Looks like it's official, Wendelin Wiedeking (Chairman and President of Porsche SE) and Holger Haerter (Vice-President of Finance and CFO) have both resigned with immediate effect. Wiedeking receives a euro 50m handshake on his way out.

The new Chairman and President of Porsche SE is Michael Macht, formerly Vice-President of Production and Logistics.


Porsche boss exits with $87m parachuteJuly 23, 2009 - 3:58PM

German luxury car maker Porsche has announced the resignation "with immediate effect'' of its chief executive Wendelin Wiedeking and financial director Holger Haerter.

In a statement today, the Stuttgart-based firm said an agreement on the resignations had been reached with the supervisory board, and that Wiedeking - said to be the best-paid executive in Germany - will get a golden handshake worth 50 million euros ($87.08 million), with half that sum going to a "social foundation''.

Porsche's current production chief Michael Macht is to succeed Wiedeking, who together with Haerter, was the architect of Porsche's bid to take over Volkswagen, Europe's biggest automaker.

AFP


Wiedeking and Haerter quit Porsche

Paul McVeigh
Automotive News Europe
July 23, 2009 07:43 CET

MUNICH -- Porsche CEO Wendelin Wiedeking and finance chief Holger Haerter will leave the company immediately, Porsche announced.


Porsche's production chief Michael Macht will replace Wiedeking. Thomas Edig, head of human resources, will be his deputy.

Wiedeking has accepted compensation of 50 million euros, the company said in a statement. Harter will receive 12.5 million euros.

Wiedeking became Porsche CEO in 1992 and led the company from being a bankruptcy candidate to the world's most profitable automaker before the economic crisis hit.

But he was brought down by an ambitious attempt to take over Volkswagen, Europe's largest automaker. Porsche's holding company amassed debts of more than 9 billion euros buying a 51 percent stake in VW. The debt became difficult to service as Porsche's car sales plunged during the downturn and the company hit difficulties agreeing refinancing packages with banks.

Qatar stake sale approved

Wiedeking's successor, Macht, 48, joined Porsche in 1990 and is regarded as a close ally of Wiedeking. Both executives worked closely together in the 1990s to boost Porsche's manufacturing efficiency.

Wiedeking said he will use half his pay off to found a charity in Stuttgart. As Germany's highest paid manager, he was criticized by some German politicians and media outlets for his compensation of 80 million euros.

Porsche announced Wiedeking's resignation after an all-night meeting of the Porsche Automobil Holding supervisory board to discuss how to tackle the company's debt burden. The meeting originally was scheduled for Thursday.

The board endorsed talks to sell a stake to the Gulf state of Qatar and to boost its finances with a capital hike of at least 5 billion euros.

The steps came as Porsche enters the final stretch of negotiations to create a combined auto group with Volkswagen.

VW has offered to buy Porsche's sports car business for 8 billion euros, according to German press reports.

VW's supervisory board is meeting in Stuttgart on Thursday to discuss a plan by VW Chairman Ferdinand Piech, a part owner of Porsche, to make Porsche VW's 10th brand.

 

[NarutoRamen]

I wish I could get millions to leave a company. Sheesh.

 

[coolraoul]

There is only one conclusion to draw from all that mess:

You don't want to mess with Ferdinand Piech...

 

[ree]

There is only one conclusion to draw from all that mess:

You don't want to mess with Ferdinand Piech...

The brand Porsche only resurged because of Wiedeking! Sad, that he must leave - but probably good for him. I wouldn't like to work with Piech.

 

[SCOTT27]

For Porsche enthusiasts the outcome is even more frightening.

Next generation 911's etc all sharing common architecture with Lamborghini , Audi and Bentley?

Expect an influx of engineering talent to leave because they have gone public anonymously against VW plans for Porsche.

 

[NarutoRamen]

Expect an influx of engineering talent to leave because they have gone public anonymously against VW plans for Porsche.

I'm sure you guys have space for some of that talent. After all, Porsche does sport really well and you guys are quite sporty.

 

[Centurion]

Next generation 911's etc all sharing common architecture with Lamborghini , Audi and Bentley?

That would not work because the 911 is RWD while the Lambo's are mid-engine. A custom architecture is the only option for a 911. Besides that, the facelifted 911 share SatNav unit with VW cars, so welcome to year 2008 Scott.

 

[SCOTT27]

Actually when VAG was in the process of swallowing Porsche that a team from VW went through Porsche with the prospect of fully integrating Porsche with other VAG brands.
The result is that VAG are currently working on a modular platform that will accomodate both front and rear wheel drive , four wheel drive obviously and the engine that can be mounted either front , the middle or rear depending on the brand and the modular platform can be stretched or shortened depending on which model will sit on it.

The idea is similar to what BMW are doing and Mercedes-Benz have now adopted the same idea for it's next generation A and C-Klasse.
Modular platforms are the future because they can accomodate a whole range of models and elements that differ from each model yet still using the basic architecture. The cost savings in going modular are very cost efficient and can allow for more spin-off models.

I am surprised this has not been mentioned it made the business papers in Germany?

 

[NarutoRamen]

The cost savings in going modular are very cost efficient and can allow for more spin-off models.

I am surprised this has not been mentioned it made the business papers in Germany?

But doesn't this also risk diluting the brand? Especially for a company like Porsche? As for why it hasn't been mentioned, perhaps they are waiting for right time or just trying to keep it a secret?

 

[martinbo]

That would not work because the 911 is RWD while the Lambo's are mid-engine. A custom architecture is the only option for a 911.

This post would've been more relevant had you said that the Porsche 911 is rear-engined (RWD has nothing to do with it) which is what you meant.

Platform sharing? Not for 911. Unless they butcher it and make it a mid-engined car. Panamera and Cayenne can share platforms and technology with other VW AG brands. In the case of the Cayenne Gen 1 this was already taking place a while back given the Touareg and Q7 synergies.

It's remotely possible that VW may use mid-engined architecture from the forthcoming Murcielago replacement as the basis for a Carrera GT halo model successor.

 

[Human]

I read the story and watched SKY, CNN etc. Yesterday with the annoucement. Porsche's NO.1 strategy for the brand is to stay independent in ALL it's design, development and assembly operations said Michael Macht the new CEO.

GO MICHAEL!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

 

[martinbo]

^ Well yes, it's obvious that this would be Porsche's strategy. But, with Porshe now under the ownership of VW AG, is this necessarily the strategy of VW?

Logically, there's every reason for VW not to meddle with the model line up and traditional Porsche USPs. But still, fundamentally, Porsche's strategy is now less watertight with VW at the helm.

 

[coolraoul]

I read the story and watched SKY, CNN etc. Yesterday with the annoucement. Porsche's NO.1 strategy for the brand is to stay independent in ALL it's design, development and assembly operations said Michael Macht the new CEO.

GO MICHAEL!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

If they (well, Macht) say it loudly, it means that it won't be the case, if you want my opinion. It's how things work in those companies.

Claim that to damper the shock of the takeover, and once it's forgotten, well... get real!

A 10rd brand that remains totally independant, bar maybe the safety belts?
When they, as standalone companies, already have shared platforms and motors (especially the world's less powerful diesel for the world's heaviest SUV )... Yeah right!

Porsche will not be the same after that takeover, that is for sure.

 

[NarutoRamen]

Claim that to damper the shock of the takeover, and once it's forgotten, well... get real!

Exactly.

 

[EnI]

Porsche will not be the same after that takeover, that is for sure.

Porsche ... brought to you by Volkswagen. What a sad story ... Porsche under VAG umbrella. Who would have thought ...

 

[Centurion]

^ Well yes, it's obvious that this would be Porsche's strategy. But, with Porshe now under the ownership of VW AG, is this necessarily the strategy of VW?

Logically, there's every reason for VW not to meddle with the model line up and traditional Porsche USPs. But still, fundamentally, Porsche's strategy is now less watertight with VW at the helm.

It was a typo, I meant rear wheel engined.

The 911 is the only car in the entire PAG/VAG line-up that is immune from platform sharing. All the others; Cayenne/Toureg, R8/Gallardo, Phaeton/Bentley CGT can morph into a single car with different flavours of options and exterior design.

A merger of the two German icons will result a collapse of the magnitude as GM, alternatively VAG would have to sell off unprofitable manufacturer like SEAT and SKODA. But what concerns me is Porsche, Audi and Lamborghini co-existing under the same umbrella -- can be no harmony and the two absolute paths are either cannibalisation or stifled creativity. The benefiting parties of that would be Mercedes, Ferrari and BMW. Audi, Lamborghini and Porsche are competitors and if Porsche indeed does merge with VAG, the concern will be too big for its own good. It would become Europe's GM unless VW scale down on the number of manufacturers in its portfolio. My suggestion would be to sell off Lamborghini and let Audi enjoy the full potential as a mid-engine car manufacturer, and SEAT needs to be discarded as it does no future and has zero brand value.