Autoblog

Porsche is one step closer to its goal of purchasing Volkswagen. Back in April of last year, the German automaker passed the 30-percent mark, forcing it to make an outright offer for The Volkswagen Group in its entirety, which it did. Not too many VW shareholders sold their stake to Porsche, as the bid was for the bare minimum amount allowed by law. Still, the legal requirement had been met, allowing Porsche to continue gobbling up the automaker according to its own timetable. Earlier this year, the VeeDub board approved a request by Porsche to obtain 51-percent of the company for some $15.73 billion, which would give it a majority stake. Before the house that Ferdinand built could complete its acquisition, the European Commission required it to make one last purchase, which took place in June of this year. Finally, the EU has granted its permission for the buyout.

This story is likely far from over, as the German State of Lower Saxony still claims a 20-percent stake in Volkswagen, which gives it certain rights to block decisions made by VW's new parents. Still, it seems that its only a matter of time before VW and Porsche are united under a different Ferdinand... Piech that is, grandson to Mr. Porsche himself.

[Source: Reuters]

Porsche is embarking on a collision course with the government of Lower Saxony. The German state in which Wolfsburg, where VW is based, holds a 20.1% interest in the Volkswagen Group. But Porsche, which currently holds 31% of the company and is aiming to acquire majority interest, is on a campaign to reduce the influence of the state government on the auto giant's governance.

While most decisions at most companies require a 50% plus one majority, or possible a two-thirds majority for major issues, Volkswagen's regulations stipulate that "significant decisions" need to be approved by an overwhelming 80% +1 in order to pass, essentially giving the state government a veto over any major decisions to be undertaken by the company's shareholders. While a ruling handed down by the European Court of Justice mandated that certain laws put in place to protect Volkswagen from a hostile take-over were illegal, the governor of Lower Saxony insists that its 20% +1 blocking power was perfectly legal and that his government would oppose Porsche's proposal to amend the regulations.

[Source: Detroit News]

Porsche's forthcoming majority stake in Volkswagen has the potential to remove a CAFE-sized thorn from the automaker's side. After a failed bid in Congress to create an exemption for itself from the recently revised fuel economy standards, Porsche needed a way to increase its CAFE rating in the U.S. This might be achieved by combining Porsche and VW's emissions and fuel-economy numbers into one lump sum, thus preserving the automaker's performance heritage.

While this certainly isn't anything new – Ford does it with Mazda, despite a minority stake in the automaker, and Chrysler has done it in the past when it was part owner of Mitsubishi – Volkswagen's average in 2007 was 28.6 mpg, just over the U.S. mandated 27.5 mpg. If Porsche gets thrown into that average, it's obvious that number is going to sink, quickly. However, Volkswagen's plan for the future involves new smaller, fuel-sipping vehicles, like the up! and more diesel-powered vehicles that might bring the number back up, but maybe not enough to meet the 2020 standards of 35 mpg. Porsche execs deny that this was a deciding factor in the buyout, but considering that the gentlemen from Stuttgart have cut a few checks to the feds over the years ($5 million in 2001), we're sure the idea wasn't lost on them while making their bid.

[Source: Autoweek]

The supervisory board of Volkswagen Group just gave approval for Porsche AG to take a majority stake in the people's automaker. Porsche currently owns 31% of Volkswagen, and this move will ultimately increase that share to 51%. The increase in ownership is estimated to cost Porsche upwards of $20 billion, although the financial deets have not yet been released. Porsche is saying that owning a majority stake in VW will not result in the two companies combining, creating a German mega-automaker of biblical proportions. Don't expect things to change overnight for either company, as transactions like these generally take months to complete, if not years.

This move wasn't unexpected, either. Porsche has slowly been increasing its interest in VW over the past several years as we reported in June 2006, April 2007 and again in June 2007. Recent announcements that Porsche may use Volkswagen diesel powerplants in its Cayenne SUV now seem even more likely, and exchanges of technology, components and production capacity between the two are likely to increase.

[Source: Detroit News]