Filed under: Government/Legal, Porsche, Volkswagen, Earnings/Financials
Porsche proposes to Volkswagen
It's official, Porsche has submitted an offer to buy the Volkswagen group. Unless you've been living in a cave, you probably already know that the erstwhile sportscar manufacturer is more profitable than the megalithic auto consortium, with all its subsidiaries, and has been steadily increasing its stake in VW.
When Porsche raised its stake in Volkswagen past 30%, German law mandated that it submit an offer to Volkswagen shareholders to buy them out and take over the automotive conglomerate outright. The mandatory offer has now been officially submitted, and subsequently approved by the German Federal Agency for Financial Services Supervision.
Porsche is offering ?100.92 per common share, and ?65.54 for preferred shares, coming in at the bare minimum required by law. Volkswagen shareholders have until May 29 to accept or refuse the offer. If they accept, Porsche will have full control of Volkswagen and all its subsidiaries, including the Audi, Skoda, Seat, Lamborghini, Bugatti and Bentley brands, turning what was once the niche sportscar maker into one of the largest automobile makers in the world. It's unlikely that the VW board will accept, however, considering Porsche made the bare min bid.
Related posts:
Press release after the jump.
[Source: Porsche]
PRESS RELEASE:
Porsche submits mandatory offer for Volkswagen shares
Dr. Ing. h.c. F. Porsche AG, Stuttgart, Germany, submitted its mandatory offer to acquire shares of Volkswagen AG, Wolfsburg, Germany, on this Monday after the offer documentation was officially approved by the Federal Agency for Financial Services Supervision (BaFin) for publication. The acceptance period is limited to approximately four weeks and ends on May 29, 2007. The price offered to the Volkswagen shareholders amounts to €100.92 per common share and €65.54 per preferred share, which represents the minimum price required by law. Porsche does not consider a premium on the minimum price to be appropriate, as the price of Volkswagen shares has risen significantly since the Stuttgart-based sports car manufacturer took an interest in the company. The mandatory offer, which is not conditional upon attainment of a minimum acceptance level, can be found on and downloaded from the Porsche website at www.porsche.com/germany/aboutporsche/investorrelations/.
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Reader Comments (Page 1 of 1)
ArchAngel 1:07PM (4/30/2007)
Please dont let this happen. I like my super Audis and Lambos the way they are.
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Bob-o 1:11PM (4/30/2007)
Please don't let it happen? Its better being owned by Porsche than owned by no one... Then you wouldn't have any Audis or any Lambos to buy at all. :)
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Chet 1:12PM (4/30/2007)
So what happens if the bid fails? Are they allowed to buy the few more shares they really wanted?
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Yago Bal 1:18PM (4/30/2007)
This is old news:
They already said it a million times: they only made the offer because the law required it, and they are offering the minimum possible because they (Porsche) don't have (for now) any interest in aquiring the VAG group. They are quite sure no shareholder will sell for that value.
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bmoredlj 2:07PM (4/30/2007)
Next up: Trader Joe's tries to acquire Wal-Mart!
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Richard S. 2:07PM (4/30/2007)
Bad move for Porsche. Now they are going to get entangled in making sure Volkswagen can compete with Toyota and Huyndai (not to mention the Chinese automakers) in the highly capital intensive and cut-throat business of popular cars (subcompact, compact and midsize). This could be a distraction for the folks at Porsche.
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frondeur 4:33PM (4/30/2007)
Porsche is the most profitable automobile company in the world, because it combines German engineering with Japanese manufacturing practices.
Right now VW is loosing money because they produce overcomplicated cars which cost too much to produce, for little to no added benefit to the consumer. (look for stories about why VW is rushing to introduce the MK. VI Golf if you want an example).
If Porsche could teach VW to make good cars for less money, they could better compete with the Japanese.
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Steve 10:17PM (4/30/2007)
There are several behind this aquisition attempt:
The EU-carbon targets will put porsche out of business and the only way to combat that is to aquire volkswagen which makes fuel-efficient diesels.
Second, porsche feels and rightly so, that lamborghini, bugatti and bentley are expensive and gas-guzzling distractions which need to be kicked-away like a destructive heroine-addiction to keep vw focused and for its future survival.
I feel volkswagen should be just
VW, Audi, porsche and skoda. bentley, lamborghini, bugatti, seat, all turds should be dumped.
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Eriq 12:34AM (5/01/2007)
Why does Porsche need to complete with Hundai? Why am I responding to this post??? VW and Porsche have always shared a similar "spirit." I don't think this would be a bad move at all. Porsche will NOT make the current VW brands worse. They'll maintain the brand very well and if not improve the brands more over time.
However, I doubt the takeover will really happen.
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Eriq 1:47AM (5/01/2007)
Uh, Steve: What are you smoking? It must be bom lol. That comment makes no sense whatsoever. Audi, Bently, Lambo, etc should be "kicked away"??? That's the funniest comment I've read on autoblog in a few months :-)
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MH 10:28AM (5/01/2007)
There's a lot of smoke and mirrors in this. The only reason for Porsche to bid on the entire company is because the law requires them to after they'd increased their stake in VW to over 30 %.
So what they did was to make a luke warm low minimum bid that's supposed to be refused. When this is said and done they can slowly increase there share stake to 50 % without any regolatory hurdles.
Don't forget that these corporate maneuverings are the brain child of VW's longtime chairman Dr. Ferdinand Piech. (Ferdinand Porsche's grandson and himself a principal shareholder of Porsche AG.)
And no, Lambo, Bentley and the others will most definitely stay. Those are Dr. Piech's personal toys and I doubt very much he wants to part with them.
Also, VW is not losing money at all. A couple of years ago they saw profits drop but that has since been rectified. Profits are up and they do seem to be steadily increasing.
What's going on now has nothing to do with labour costs, production efficiency, profits and the almighty Dollar (or in this case Euro).
This, quite simply put, is a game of high stakes power-chess, nothing more. A game Dr. Piech and his family is on the very verge of winning.
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