If you weren't paying close attention, you probably missed the climax of the Volkswagen and Porsche union. After three years of trying to plan the perfect wedding – and by "perfect" we mean one in which VW didn't have to pay $1.9 billion in tax on the transaction – and two years in which Porsche inadvertently played Bridezilla, the consummation has resulted in matter-of-fact announcements and a jargon-filled press release from VW.
After five months of finessing the deal, Volkswagen and Porsche Holding SE have figured out how to sidestep the tax man: VW's €4.5 billion purchase of the remaining 50.1-percent stake in Porsche's sports car unit was going to mean a tax liability of €1.5 billion ($1.9B U.S.) due to the Baden-Württemberg Finance Ministry. Volkswagen was going to be on the hook for that, and the amount threatened to scuttle the deal.
It's been a whole three weeks since we checked in with Volkswagen's takeoever of Porsche, and the most recent news wasn't so good: investors filed a $2.6 billion suit against Porsche over the Stuttgart maker's attempt to gobble up VW. Those same investors also filed an arbitration application against Volkswagen. That hasn't stopped a VW executive from saying that its ownership of Porsche could finally be concluded this year, according to a report in Der Spiegel.
Cue Ennio Morricone and the symphonic accompaniment to the endgame: VW has officially taken a 49.9% stake in Porsche. VW paid €3.9 billion ($5.75B U.S.) for its cut, "based on the enterprise value for Porsche AG calculated under a careful due diligence and valuation procedure." That's a few shades more than the €3.3 billion amount VW was saying it would pay a few months ago.
Remember the Porsche 914? Most Porschophiles do, although some choose to forget the mid-engined sportscar built from 1969 through 1976. But the four-cylinder model was something of a sales success for the German automaker, handily outpacing the firm's range-topping 911 series throughout its model run. Might we see a return of the entry-level Porsche, once again with a little help from Volkswagen?
When Volkswagen and Porsche sat down at dinner to discuss which one was going to eat the other one, they forgot to invite the German tax man. After VW came to terms with Porsche to take a 49.9% stake in the Stuttgart sports car maker for €8 billion (around $11.4 billion U.S.), the parties discovered there would be a €3 billion ($4.26B) tax bill on top of that.
The way things read, Porsche might not have to get a merger deal done with Volkswagen, but it would appear to be in the carmaker's best interests if it does. The holdup seems to be Porsche – since VW still doesn't know what Porsche's financial situation is, talks broke down earlier this week. VW's labor leader, who has a seat on VW's board, has also said he doesn't want to speak to Porsche again until Porsche tells everyone what it really has in mind.
Looks like Porsche won't be feasting on more shares of VW for Thanksgiving. Porsche has apparently decided to postpone its move to buy a majority stake in Volkswagen due to the global economic crisis. CEO Wendelin Wiedeking said he still wants that 75% share of VW, but that it's just too difficult at the moment. It doesn't help that VW shares are trading for "economically ridiculous" prices according to Porsche finance chief Holger Haerter. Porsche shares are trading at 57.261 euros, while VW wa
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