Volkswagen to buy 49.9% of Porsche in first stage of merger
The days of Porsche being an independent automaker will soon be drawing to a close. Volkswagen has announced that it is ready to move ahead with the first stage of its buyout of the smaller company that had tried to do the same thing to it just a short while ago. Back in August when the VW board approved the merger, the Wolfsburg company announced that it would start off by purchasing 42 percent of Porsche AG, the car building unit of Porsche. That stake has now been increased to 49.9 percent and the purchase will happen before the end of 2009.According the announcement from Volkswagen, work on future joint projects between the two companies is moving ahead faster than anticipated. As a result, VW is buying a larger stake now with the expectation that Porsche's share price will increase next year due to these new projects.
Next year VW will be issuing more preferred shares in itself to help pay for the rest of the acquisition while maintaining its credit rating. The full merger is expected to be completed sometime in 2011.
[Source: Volkswagen]
Press Release
Integrated automotive group: Volkswagen will take a 49.9 percent stake in Porsche AG in first step
Wolfsburg, 20 October 2009 - Volkswagen Aktiengesellschaft will take a 49.9 percent stake in Porsche AG in a first step towards an integrated automotive group with Porsche. This was agreed between Volkswagen and Porsche SE during negotiations on the contracts of implementation relating to the merger of the two companies. The Comprehensive Agreement announced in August referred to an initial participation in Porsche AG amounting to 42 percent. The timetable for the creation of the integrated automotive group remains unchanged: Volkswagen will acquire a participation in the operating business of Porsche by the end of 2009. The merger of Volkswagen AG and Porsche SE is still scheduled to take place during the course of 2011.
The adjustment of the envisaged initial participation reflects the successful progress of negotiations between Volkswagen and Porsche concerning the details of the merger which have been taking place since the Comprehensive Agreement was approved. These negotiations indicate that the projects identified for a closer cooperation have been making swifter progress than initially anticipated. This positive development for both companies, which is an expression of the compelling industrial logic behind the merger, is now to be underscored by a larger participation in Porsche AG. Volkswagen is thus securing a higher share of the increase in the value of Porsche expected from the joint projects at an early stage. At the same time, Volkswagen remains committed to the phased integration of the two companies and is preserving the independence and the interests of Porsche.
Based on the enterprise value calculated for Porsche AG, Volkswagen is expected to pay approximately EUR 3.9 billion for the participation in the company. An increase in Volkswagen's preferred share capital is planned for the first half of 2010 in order to refinance the participation and maintain Volkswagen's good credit rating. Shareholders will be requested to adopt a resolution authorizing such an increase at an Extraordinary General Meeting on December 3.
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Reader Comments (Page 1 of 1)
KIB2 8:38AM (10/22/2009)
I thought it was going to be the other way around. Wonder what Porsche lover feel about this. I just hope we dont start seeing Porsche Golf rollin all over the place.
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Redline 11:03AM (10/22/2009)
Read up about Ferdinand Piech and his previous involvement with Porsche. Interesting stuff.
Luso 9:35AM (10/22/2009)
I am fed up of this German soap opera.
http://www.carnorama.com
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vkchu 9:40AM (10/22/2009)
yep, it was. quite a reversal of fortunes.
at one point, porsche was looking to have a controlling stake in vw.
remember that orchestrated short squeeze a little while back?
porsche acted more like a hedge fund, but then they mismanaged their huge windfall and then had to get a loan backed by vw. hilarious, really.
watch vw shut down the cayenne, cayman and the panamera just out of spite.
id totally do that to put porsche in their place and show em who's really the boss.
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sparrk 9:48AM (10/22/2009)
"watch vw shut down the cayenne, cayman and the panamera just out of spite." - that's stupid , the owners of Porsche are the same guys who control and own the majority of VW, the Porsche and Piëch family , grandsons of Ferdinand Porsche. if Porsche owns VW or VW owns Porsche , it's the same guys running the show, why would they kill cars that bring them money ?
vkchu 9:53AM (10/22/2009)
can i reply to myself?
notice the word, "spite."
obviously it would be a poor business decision if those vehicles are profitable, no?
*sigh*
Dondonel 10:10AM (10/22/2009)
This story is still not reported correctly. Porsche SE owns 50% of VW, however because of debt burden it aquired during this acquisition process it agreed to sell 50% of Porsche AG (the car maker, a Porsche SE subsidiary) to VW to cover the losses. In the end Porsche AG will merge with VW but Porsche SE will still own the new company.
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NB 10:40AM (10/22/2009)
Thank God ], someone that can read got tired of trying to explain Porsche se---->VW(Porsche SE own 50% or more)- ------>Porsche AG(VW owns 50% sold to them by Porsche sa)
DayShifter 12:31PM (10/22/2009)
+1
Thanks.... that whole thing was a little confusing.
kbm123 11:29AM (10/22/2009)
Automobile magazine has a nice, concise rundown of what happened and what we can expect. Piech (the grandson of Porsche) basically runs VW, he wants to see Porsche return to making sportscars. He doesn't like the Cayenne or the Panamera. These two will die off after their current product cycle (about 6-7 years). The Panamera engineering won't be wasted. Much of it will transfer to Lambo for an upcoming Estoque model. The new focus for Porsche will be a new supercar (think Carrera GT) and a 356 type successor. We all need to remember that Piech is an evil genius. He was responsible for many outstanding achievements during his career at Porsche and Audi including major advancements in their racing programs such as the Porsche 808, the (OMG) 917 program, Audi Quattro, and in between his stints at Porsche and Audi, he had his own company that created 5cyl diesel engines and sold them to Mercedes. He's definitely not like the rest of the auto biz schmuckos. He's kept Bentley as Bentley and Lambo is still Lambo. There are no Bentley SUVs and no front engine, 4 cyl Lambos. Porsche will continue to be Porsche, and from the sound of things, it will even go back to being more like it was years ago before the Cayenne and Panamera.
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Carlo_Carrera 2:01PM (10/22/2009)
@ kbm123
I think your assessment is spot on.
Piech make his name as a great race car maker with Porsche.
He loves Porsche and wants it to maintain it's greatness. He has always wanted to be in charge of Porsche. I wouldn't be surprised in few years to see Audi drop out of Le Mans style competition and Porsche to re-enter, building a top class car and going for overall wins at Le Mans.
I do think though that the Cayenne and Panamera might hang around longer than most people think. The Panameras at my local dealership are selling like hotcakes and a 2 door coupe will sell even better.