The final version of the pre-nup between Volkswagen and Porsche didn’t quite work out as Reuters had reported. Their sources—two supervisory board members—probably didn’t listen correctly. Shame on them. Here is the real deal:
Reuters correctly cites an official Volkswagen statement: VW will “initially” take a 42 percent stake in the sports car maker Porsche AG “until the end of 2009.” VW will pay up to €3.3b ($4.7b) this year for the initial stake. Then, Porsche SE (which owns Porsche AG and 51 percent of Volkswagen) will be “amalgamated with Volkswagen in the course of 2011.” The supervisory boards of both Porsche and Volkswagen approved it, it’s a go.
In a move that will raise eyebrows in the industry, Volkswagen says that “it is planned that the families will also sell the auto trading business of the Porsche Holding Salzburg to Volkswagen.”
Unbeknownst to many, Porsche Salzburg is the exclusive importer of all things Volkswagen to Austria and owns the largest chain of Volkswagen dealerships in Europe. The chain is present in 18 countries of Europe and in China. Volkswagen has already taken over many independent importers and large dealers in Europe. By buying the Porsche auto trade business, VW is one step ahead in the disintermediation of its dealer network.
Reuters says that “the business, with an enterprise value of €3.55 billion, will be sold by 2011.”
The Gulf state of Qatar will be the third-largest investor in the combined company, said VW CEO Martin Winterkorn. Negotiations are on-going. Their stake is unspecified, but it will be less than that of the second-largest owner, VW’s home state of Lower Saxony, which retains a stake of 20 percent in Volkswagen.
Winterkorn said that the Porsche and Piech families will remain the largest shareholders in the company to arise from the combination of VW and Porsche SE.
As far as the tax speculations of the TTAC commentariat go, just two items: One, the German tax code is very complex and is not to be compared with the American. Two, knowing VW’s CFO Hans Dieter Poetsch and his help at Lower Saxony’s capital in Hannover, we may rest assured that the complicated transaction will be performed in the most tax-advantageous manner.
Thanks BS, without your clear explanations this was impossibly serpentine to understand.
The other key piece of information seems to be that Porsche is to remain autonomous of VW.
PeteMoran : The other key piece of information seems to be that Porsche is to remain autonomous of VW.
Does anyone, anywhere really believe that?
@ mpresley
I guess the only difference that makes it believable is that VW said the opposite about Lamborghini, Bentley, Seat, Skoda and Audi (NSU Auto Union).
PeteMoran : The other key piece of information seems to be that Porsche is to remain autonomous of VW.
Porsche will be just as “independent” as the other Volkswagen brands. I.e., Porsche will be at the back and call of Wolfsburg.
The official statement says: “The Eigenständigkeit (autonomy,independence, originality, self-reliance – whatever you want to read into it) of Porsche will be guaranteed within the integrated group of companies. This is consistent with the well-proven decentralized management style of Volkswagen. Like Audi and other successful brands, Porsche will retain its identity while profiting from being a part of the affiliated group.”
As someone who has authored VW euphemisms for more than 30 years, I can tell you that this is the death sentence for Porsche’s independence.
@ BS
That is a different statement than what I remember when they took over Lamborghini, Bentley, Seat and Skoda however.
Uber-Beetle it is then! Damn shame.
I’m basically a free-market supporter, adn thus resigned to the fact that soemtimes, mergers and acquisitions happen and firms get swallowed. I’m not so sure how “free” this particular transaction is.
I worked for a 100-year-old firm that got swallowed, and within 5 years not a trace is left. But, the guys who owned the firm at the time decided to accept a good offer; so be it. They were the owners, not me.
But either way, it’s a shame to see a name like Porsche, which resonates from my childhood, possibly at the beginning of its end.
Before you Porschephiles jump off a cliff, don’t forget that Fiat owns Ferrari, and Ferrari cars have never been as good as they are today…
I suspect this is just a good German way of moving money around whilst slapping former Porsche CEO Wendelin Wiedeking around financially for his near-takeover of VW. Business as usual.
Imagine the amount of money and effort that goes into this sort of transaction, however, and not one new product to show for it…
Do you think the (eventually fully combined) company be called AutoUnion AG, Bertel? Or will it be AutoUnion GmbH? (I don’t know the difference, if there is any functional difference).
Perhaps the name PorscheAutoUnion would be better, since Herr Dr. Porsche (the original) had so much to do with all of these companies (now merging) at one point or the other.
When are we going to get a test of an AutoUnion 1000 two-stroke coupe or sedan on TTAC?
(I know, I know; good luck FINDING one). Hint; you might want to look in Brazil, they built them there new until 1967.
“The other key piece of information seems to be that Porsche is to remain autonomous of VW.”
What a joke. Porsche and VW have been joined at the hip since birth. What exactly does autonomous mean in that context?
“Uber-Beetle it is then! Damn shame.”
Think of it as getting back to Porsche’s roots. The hallowed 356 was in fact an Uber-Beetle.
Menno: Definitely AG
Great. So, next up is the 2.0 TFSI 911 Quattro? Of even better… a 911 1.9TDI? What a mess to understand!
Or maybe VW will finally make Porsche do the R4 for Audi. I’d love to see the TT replaced with a decent mid-engine, rear (and quattro) driver. Even if Audi was restricted to four-cylinder variants. Boxster dynamics, Audi price, no Porsche stigma … count me in.