News - Porsche
VW pledges bigger, better Porsche
Porsche models boost promised as VW takes control with $5.5 billion buyout
14 Aug 2009
VOLKSWAGEN has promised more Porsche models with greater sales volumes after taking effective control of the debt-burdened luxury sportscar-maker in Germany last night.
In a victory to VW CEO Martin Winterkorn and VW chairman Ferdinand Piech, VW AG announced that it had agreed to buy an initial 42 per cent stake of Porsche AG by the end of this year as the first step in an eventual merger to create an automotive giant by 2011 with ambitions to be world number one.
It marked the final unraveling of Porsche’s ill-fated attempt to take control of VW, brought undone by the global financial crisis and the over-reaching ambitions of former Porsche CEO Wendelin Wiedeking.
The new, combined company will be run by VW’s Mr Winterkorn, but VW has promised that the Porsche’s independence will be safeguarded in the new group of 10 automotive brands with total annual sales of more than six million units.
The new arrangement is unlikely to have any short-term effect on Porsche’s Australian operations, where Porsche Cars Australia spokesman Paul Ellis today said it was business as usual at subsidiary level.
“We are not convinced that anything is broken and needs to be fixed,” he said.
“This is all happening at a global level. If there is a master plan for improved synergies or combined operations at our level, I can’t see anything happening in the short to medium term.”
Left: VW CEO Martin Winterkorn. Below: Former Porsche CEO Wendelin Wiedeking.
The decision to integrate the companies was approved at an extraordinary meeting of the VW supervisory board in Wolfsburg, where VW also decided to press ahead with talks to sell Porsche’s VW share options to the Emirate of Qatar to bolster Porsche finances.
VW will pay about €3.3 billion ($A5.5b) for the 42 per cent stake in Porsche AG, financed by a fresh issue of preferred shares in VW in the first half of next year.
As well, Porsche’s financial state will be improved by the sale to Volkswagen of the separately owned Porsche Holding Salzburg for €3.55 billion by Porsche’s largest shareholders, the Porsche and Piech families.
Porsche Holding is Europe’s largest automobile trading company, selling up to 474,000 vehicles a year.
The family shareholders will use the bulk of the proceeds from the sale to increase the ordinary share capital of Porsche SE. This will be accompanied by an issue of new Porsche SE preferred shares.
Porsche SE will then be merged with VW in a final step in 2011.
The Porsche and Piech families will remain the largest shareholders in the combined VW and Porsche SE, with VW’s home state of Lower Saxony second with 20 per cent and Qatar third with a yet-to-be announced share holding. VW and Porsche workers will also hold a substantial share.
Under the new set-up, VW AG will be the umbrella company for 10 “independent” brands, including VW, Audi, SEAT, Skoda, Porsche, Lamborghini, Bugatti, Scania and VW Commercials.
“More than ever before, we now have what it takes to become the automotive industry’s number one,” Mr Winterkorn said.
“Volkswagen is systematically continuing its successful multibrand strategy by integrating Porsche. Additional new growth opportunities will emerge for Porsche under the umbrella of the integrated group.”
Mr Winterkorn promised that Porsche and VW would both benefit from shared technical expertise.
Porsche would also get new, additional models that would increase Porsche sales “substantially”.
“We want to write a new chapter in a history of substantial growth,” Mr Winterkorn said. “This will help us safeguard high-quality jobs in Germany for the long-term and create new ones.”
Already Europe’s biggest car-maker, VW made it clear in the announcement that it had its eyes on taking the number-one position from current leader Toyota.
“As a group with now 10 strong, independent brands, we will further expand out unique global position,” Mr Winterkorn said.
“More than ever before, we now have what it takes to become the automotive industry’s number one.”
While Mr Winterkorn is plotting world domination, his rival in the power struggle for control of VW, former Porsche CEO Wendelin Wiedeking, is licking his wounds with the help of a €50 million ($A87m) golden parachute after resigning last month.
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