Porsche, yet again, raising stake in VW
The tail keeps wagging the dog over in Germany, as low-volume Porsche is again looking to bump its stake in high-volume Volkswagen. This time, Porsche's supervisory board authorized increasing its stake to 31%, an action which would require the luxury sports maker to make a bid for VW itself. Porsche expects the mandatory bid (any stake increase over 30% requires a full bid) for VW will cost $134 a share.
The proposed combo would be formed as a holding company and converted to a European stock corporation with 12 supervisory board members headquartered in Stuttgart. Increased competition from Japanese, Malaysian, and Chinese automakers was cited by Porsche as a main reason to increase its share of VW. We're sure Porsche doesn't mind the windfall profits they've had since 2005, when they began investing in Volkswagen, either. This is huge news in Europe, where VW has long been at the top of the food chain, and we're getting the feeling that we'll be reading more industry stories like this in general as time progresses.
[Source: Market Watch]
Reader Comments (Page 1 of 1)
Ben 10:38AM (3/25/2007)
I don't understand this kind of financial mumbo-jumbo. I always thought Porche was a subsidiary of VW like Ferrari was a subsidiary of Fiat. Tail wagging the dog indeed. I know... maybe Jeep can buy Chrysler.
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ANdy 10:59AM (3/25/2007)
"Increased competition from Japanese, Malaysian, and Chinese automakers..."
Japanese and Chinese I can understand, but Malaysian?! I say this as a Malaysian wondering how on earth VW or Porsche would be troubled by Malaysian automakers, especially Proton.
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MH 12:15PM (3/25/2007)
This is not a big surprise at all. VW and Porsche has always had extensive contacts and a lot of financial ties.
Remember, Ferdinand Porsche was the man who designed the very roots of VW, the Beetle. He also gave the company the name it still bears to this day.
For the last fiftheen years or so the man in charge of VW has been Ferdinand Porsches grandson, Ferdinand Piech (himself a major shareholder of Porsche AG).
It's pretty obvious that he and the rest of his family is working together with VW to make sure that VW in the future will be safe from takeover attempts and other nasty destabilizing ongoings in the automotive world. And of course in doing so securing his own power in the process I bet.
The first step seem to have been to secure his own power as chairman of the VW supervisory board for yet another term.
Step two was to outmaneuver the man that he himself a few years ago handpicked for the job as CEO, Bernt Pischetsrieder.
Step three has apparently been to secure his own, and his family's hold of the company, this time in an undisputed financial way and not only an emotional one.
I think that the Porsche family has always regarded VW as "their" company. The only difference now I think is that they have chosen to affirm this position to the public.
The tail wagging the dog it's not, these two companies surtainly come from the same roots, and is probably the most natural and friction free fit anyone could hope for in the automotive industry.
As such, it makes perfect business sence. This is simply a move from both parties to ensure the stability of the VW and keep it away from beancounting sharks that do nothing but hamper growth and prosperity and let's not forget, forward thinking and planning.
Stability is surtainly a key word here. A lot of companies want it, few have it. That's the plain truth.
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ruggels 12:42PM (3/25/2007)
"always thought Porsche was a subsidiary of VW like Ferrari was a subsidiary of Fiat."
you always thought wrong. Porsche has oft partnered with VW, but hasn't been one of VW's brands like lambo, Bentley, bugatti, audi.
Great news, i can't wait to see what porsche does with audi in the long term
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Richard Warren 12:51PM (3/25/2007)
#1 What planet have you been on?
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James Valley 8:40PM (3/25/2007)
3#
You're no completely right: they share a history, but they were always completely independent: Porsche was run by the Porsche family, VW by the English Government Army, and then by the West German government, and finally the State of Niedersachsen (Lower Saxony).
So, you see, Porsche didn't have anything to do with VW's history, besides Ferdinand Porsche designing the Beetle, and ocasional colaborations between Porsche and some of the VAG Group brands.
But Porsche isn't trying to protect VW from the beancounters: they ARE the beancounters: just look at their recent history: huge profits from controversial strategies: a 911 and a Boxter that are 65% the same car, and a SUV...
I'm only affraid they will ruin the exotic marvel that gravitate VW: Lamborghini, Bugatti, Bentley and, possibly, Lotus, if it comes with Proton.
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chad.dawkins 9:28PM (3/25/2007)
Hell I thought the only reason why they were interested in VW was because of DSG.
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