After Porsche moved to increase its ownership in Volkswagen to 51 percent last week, an overzealous German magazine took it one step further over the weekend by reporting that Porsche was going for an even larger piece of the pie... a whopping 75 percent. Porsche pulled in the reigns and quickly released a statement today denying the action, pointing out that such a move, "...overlooks the realities in VW's shareholder structure." For now, there is apparently no truth to the published reports that Porsche is going to continue gobbling up Volkswagen.
Maybe so, but analysts have pointed out in the past that the most economically advantageous position for Porsche is if it can get its hands on Volkwagen's multiple sources of income through a so-called "domination and profit transfer" agreement. Such an agreement usually requires owning - what do you know? - a 75 percent stake in a company. Interesting.
The enthusiast-oriented Porsche has said it needed ownership in Volkswagen to prevent the automaker from falling into unfriendly hands (roughly 30% of the parts used in Porsches come from VW, so it's just protecting its component parts sugar daddy). Meanwhile, Lower Saxony, the second biggest shareholder of VW at some 20% with some serious veto power, has the power to block any maneuver that jeopardizes the 82,000 VW jobs in its state. Stay tuned, this isn't the end of it.
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.
The latest in Porsche-Volkswagen relations is that the sports car maker has contingencies in place to raise its stake in the VW Group, but at this point is not planning an outright takeover.
As you may recall, when Porsche recently increased its ownership in Volkswagen AG, it was bound by German law to make an offer to purchase controlling interest. The offer Porsche submitted to Volkswagen shareholders was purposely low because Porsche didn't want to fully take over Volkswagen.
That law is now on the verge of being repealed, leaving the door open for Porsche to further increase its stake, but that doesn't mean that it will automatically take the opportunity to further entrench the anschluss between the two companies founded by Ferdinand Porsche. If, however, Porsche's position on the Volkswagen board is threatened, it could increase its stake up to 50-percent without any further bureaucracy and legal issues, but for now it plans on staying where it is.
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 Є100.92 per common share, and Є65.54 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.
Ford Motor Company was quick to issue a brief statement regarding the meeting that took place between its CEO, Alan Mulally, and executives from Toyota last week in Japan in order to quell speculation of an alliance or partnership, but news of the meeting had a very positive effect on the Blue Oval's share price today, which rose to a three week high of $7.59, up about 1.3 percent or 10 percent compared to yesterday. Ford's stock began to rise around noon yesterday as news of the meeting began to spread. Wall Street is likely reacting to the prospect that any collaboration with Toyota could result in some much needed cost-cutting at Ford. Tomorrow will tell us whether Ford's stock deserves to be flirting with $7.60, but for the time being the idea that our own Blue Oval could be in cahoots with the Japanese Juggernaut has investors curious and hopeful.
Billionaire investor Kirk Kerkorian announced today that his investment firm Tracinda Corp. had cut its stake in General Motors from 9.9% to 7.4% by selling $462 million worth of the automaker's stock. That amounts to a sell off of 14 million shares at $33 per share.
The move by Kerkorian comes after the soap opera-like events surrounding a proposed alliance between General Motors and Nissan/Renault that ultimately fell through despite Kerkorian's support. In fact, Kerkorian and the man he placed on GM's board, Jerry York, were the ones who proposed the alliance and approached Nissan/Renault without the board's knowledge. Many postulate that GM CEO Rick Wagoner didn't appreciate the surreptitious move that usurped his power and he therefore made sure the proposal was shot down. A committee chosen by Wagoner was set up to evaluate the alliance and found that the proposed alliance would benefit Nissan/Renault more than it would GM. For its part, Nissan/Renault was unwilling to pay a large sum of money that numbered in the hundreds of millions, which GM proposed would even out the partnership. On account of the failed alliance, Jerry York resigned from GM's board on October 6th.
Who knows what goes on in the mind of Kirk Kerkorian, but knowing what we know about GM's product lineup stretching out through 2010, we'd have to say that selling his stake in the company is a move that will probably lose money in the long run. We're not financial analysts by any means, but GM's turnaround has just started the back nine and will bear fruit in the form of profits before the end of 2008. Or so says our Magic 8-Ball.
Toyota announced today that it will spend $373 million on a deal with Isuzu that will transfer 5.9% of the truck- and diesel-maker to the giant Japanese automaker. Toyota's goal in purchasing a stake in Isuzu is to bolster its diesel portfolio, which apparently lags behind other major automakers like cross-town rival Honda who announced in September it would have diesel-powered passenger cars for sale in the U.S. within three years.
We always expected that Toyota would rely on its own Hino Motors commercial truck subsidiary for a diesel engine to power a heavy-duty version of its new Tundra pickup, but Hino is not prepared to make smaller diesel engines for passenger cars and potentially diesel hybrids. Isuzu offers Toyota the know-how and production capacity for diesel engines that are smaller than 2.5-liters, which makes the purchase seem like a perfect fit.
Mitsubishi will now become the largest single shareholder in Isuzu with 9.7% of the stock, followed by trading house Itochu Corp. with 7.2% and Toyota with 5.9%. GM sold all of its stock in Isuzu back in April, which amounted to 7.9%. Today's announcement marks the second time Toyota has swooped in and picked up shares in a company that GM has cast off, the first being Fuji Heavy Industries, the parent company of Subaru.
The business world has always confounded us for being a place where one can celebrate with champagne after not posting a profit for three months, if only for the fact that you didn't lose as much money as people thought you would. Such is the case with General Motors, which today announced that it had lost "only" $115 million this quarter. Those pesky "special items" in the ledger amount to $644 million for GM and include money that's been spent to aid the reorganization of Delphi and "goodwill impairment" on GMAC (from what we gather, it's a reevaluation of the finance company's worth). Excluduing special items, GM actually posted a net income of $529 million on revenue of $48.8 billion, which is a marked improvement over last year's adjusted loss of $1.1 billion and comes mainly from the good old fashioned practice of selling cars and trucks. General Motors also was able to fine tune the amount of money it expects to spend on Delphi, which previously was thought to be between $5.5 and $12 billion, but now looks to be between $6.0 and $7.5 billion.
On the auto side of things, GM's global market share was 13.9% percent in Q3, up slightly from the second quarter but below the 14.4% it recorded in Q3 2005. In the all important North American market, however, GM captured 25.1% of consumers' hearts and wallets, the best quarter it's had this year. GM North America still reported a loss of $367 million in Q3, but again, it's an improvement of $1.3 billion over last year this time and was acheived despite producing 96,000 fewer vehicles (likely the result of lower rental and fleet sales).
You can check out GM's full press release for more details after the jump.
"Screw you guys, I'm going home." A phrase made famous by Cartman from South Park but one that we find so apt for news coming out of General Motors this afternoon. Royally irked over the ending of alliance talks with Renault/Nissan, billionaire investor Kirk Kerkorian has announced that he won't buy an additional 12 million shares of GM stock as he said he would, and that his advisor/muscle Jerry York has resigned his seat from the board of General Motors. The additional 12 million shares would've pumped Kerkorian's share of GM from 9.9 percent to around 12 percent. What will Kerkorian do now after his move to manhandle GM management has failed? Who knows, as this guy has been anything but predictable.
Isuzu Motors announced today that Mitsubishi Corp. has become its top shareholder after increasing its share of the automaker from 3.5 percent to 15.65 percent. Mitsubishi Corp, the huge conglomerate that also owns 13 percent of Mitsubishi Motors Corp, first scooped up a share in Isuzu when General Motors dropped back its stake in the company back in April, and this news came about after Mitsubishi decided to convert all the preferred share that it purchased back in 2005 into common stock. Mitsubishi is clearly looking to strengthen its ties with Isuzu and benefit from the automaker's truck business.
Mitsubishi is a huge company, and it's no suprise that it is looking to strengthen its truck portfolio. A major factor in Mitsubishi's success last year was the strong sales of its trucks in Thailand, believe it or not. It will be interesting to see how much Mitsubishi integrates Isuzu into its current product offerings, as in some markets the two are direct competitors. It will be also interesting to see what becomes of Mitsubishi's relationship with DaimlerChrysler, as its current midsize truck offering, the Raider, is based on the Dodge Dakota. And what of GM's midsize trucks, the Chevy Colorado and GMC Canyon, which share their identity with Isuzu versions that have different grilles and bigger warranties? Seems as old relationships unravel, new ones are forming quickly.
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.
Billionaire investor Kirk Kerkorian announced today that his investment firm Tracinda Corp. had cut its stake in General Motors from 9.9% to 7.4% by selling $462 million worth of the automaker's stock. That amounts to a sell off of 14 million shares at $33 per share. 
The business world has always confounded us for being a place where one can celebrate with champagne after not posting a profit for three months, if only for the fact that you didn't lose as much money as people thought you would. Such is the case with General Motors, which today announced that it had lost "only" $115 million this quarter. Those pesky "special items" in the ledger amount to $644 million for GM and include money that's been spent to aid the reorganization of Delphi and "goodwill impairment" on GMAC (from what we gather, it's a reevaluation of the finance company's worth). Excluduing special items, GM actually posted a net income of $529 million on revenue of $48.8 billion, which is a marked improvement over last year's adjusted loss of $1.1 billion and comes mainly from the good old fashioned practice of selling cars and trucks. General Motors also was able to fine tune the amount of money it expects to spend on Delphi, which previously was thought to be between $5.5 and $12 billion, but now looks to be between $6.0 and $7.5 billion. 
"Screw you guys, I'm going home." A phrase made famous by Cartman from South Park but one that we find so apt for news coming out of General Motors this afternoon. Royally irked over the ending of alliance talks with Renault/Nissan, billionaire investor Kirk Kerkorian has announced that he won't buy an additional 12 million shares of GM stock as he said he would, and that his advisor/muscle Jerry York has resigned his seat from the board of General Motors. The additional 12 million shares would've pumped Kerkorian's share of GM from 9.9 percent to around 12 percent. What will Kerkorian do now after his move to manhandle GM management has failed? Who knows, as this guy has been anything but predictable. 
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