Porsche takes a $47b loan out to bid for VW
What's it take to purchase a controlling stake in Volkswagen? Reuters' reports contacted all the major institutions involved in the deal and came up with 35 billion euros, or $46.47 billion US. To give Porsche the required 30.94-percent of shares, the guys and gals in Stuttgart have tapped ABN AMRO, Barclays Capital, Commerzbank Merrill Lynch and UBS to arrange the purchase.
While all the technical details escape those of us lacking any extensive knowledge of such heady financial topics, it's easy for us to understand that Porsche has to submit a slew of documentation to German regulators over the next four weeks in order to be reviewed, analyzed and approved before such a purchase could take place.
[Source: Reuters via Automotive News (Sub. Req.)]
Reader Comments (Page 1 of 1)
epilonious 8:54AM (3/30/2007)
Does that mean Porsche is going for all of Volkswagen-Audi group? or just the Volkswagen part of it?
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rgseidl 8:56AM (3/30/2007)
It's my understanding that Porsche already had the options to buy the additional 3 or 4% they needed to get them above the 30% mark and, that they exercised them this week using money they had in the bank.
This EUR 35 billion line of credit is required to secure the formal takeover offer that German law requires a shareholder to make when that mark is reached. However, Porsche has indicated it is not actually interested in a controlling stake in VW at this time, which is why the bid is so low. Porsche is simply jumping through the hoops and does not expect to use much if any of this line of credit anytime soon. Porsche will not be required to make another takeover offer if it decides to increase its stake in VW at a later date.
Together with the state of Lower Saxony, which owns 20.75%, Porsche will now be able to control VW - a defensive strategy against foreign investors. For now, the "lex VW" means Porsche only enjoys equal voting rights with the state, even though it owns more of the shares. However, it is widely expected that the highest EU court will overturn this old law later this year.
Many commentators believe Ferdinand Piech, who is heavily involved with both companies, to be the driving force behind all these moves.
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rgseidl 9:17AM (3/30/2007)
@ epilonious: The bid is for shares in Volkswagen AG, which includes 100% of the VW, Audi, Skoda, Seat, Lamborghini, Bentley and Bugatti brands as well as stakes in MAN and Scania.
The VW corporation is highly integrated. Its brands share major components such as floor pans, non-visible body parts, base engines, transmissions and base accessories, typically among vehicles in the same segment. The modular concept is more flexible than traditional platforms, though, giving the brands more leeway for product differentiation than the rebadging practiced by e.g. GM.
Porsche sources the raw chassis for the Cayenne from VW's sheetmetal and welding plant in Bratislava (Slovakia). VW uses the same module for its Touareg SUV.
See my previous post for details on why Porsche is making a takeover offer for VW at this time.
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Brad 1:03PM (3/30/2007)
Very Interesting. T
And I thought a $10,000 loan was bad.
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Rocket Punch 1:05PM (3/30/2007)
rgseidl, you are my new idol. readers like that makes this blog even better! thx.
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AMcA 8:19PM (3/30/2007)
That suggests an enterprise value of round about $150 billion. Crazy. Insane.
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