The financial saga at Porsche continues...
#2
Rennlist Member
"...according to a person familiar with its finances, who requested anonymity because it involved confidential data."
Media ethics...It's acceptable to reveal and publish confidential information so long a you invoke anonymity.
Media ethics...It's acceptable to reveal and publish confidential information so long a you invoke anonymity.
#3
Nordschleife Master
Tables Turn in Porsche’s Pursuit of VW
By CARTER DOUGHERTY June 20, 2009 - NYT
FRANKFURT — When Wolfgang Porsche learned that his family’s sports car company would need an emergency cash infusion from its giant rival Volkswagen, he “went absolutely white.” “It was as though he’d heard someone died,” said one person briefed on the secret meeting between executives of the two companies. The meeting, at the offices of the governor of Lower Saxony state, where Volkswagen is based, effectively ended the company’s audacious bid for Europe’s largest automaker. It also was the beginning of the end of Porsche’s cherished independence. A day after the meeting, on March 23, fax machines around Germany spit out papers for Volkswagen’s board members to sign: an emergency loan of 700 million euros from Volkswagen, about $950 million at the time.
“This is becoming a reverse takeover on a financial level,” said Arndt Ellinghorst, head of automotive research at Credit Suisse in London. “Porsche has debt and VW has the luxury of cash.” Even amid the tumult that is the car industry these days, the story of Porsche and its overreaching ruling family is a singular drama. Its denouement was most likely prompted by Porsche’s taking out billions of euros in loans to acquire the last portion of Volkswagen that it did not own, enlarging its debt load at precisely the moment capital markets froze up. At heart, though, the role reversal — where Porsche turned from Volkswagen’s predator to its prey — is the latest scene in a family saga. “In the end, this is about clans,” said Stefan Bratzel, head of the automotive research center at the University of Applied Sciences and Economics in Bergisch-Gladbach, near Cologne. “It is the Porsche clan versus the Piëch clan who belong to a single familial line, but maybe that makes the conflict that much harder.”
Both families descended from Ferdinand Porsche, who created the Volkswagen Beetle in the 1930s. After World War II, Ferdinand’s son Ferry set up his own company, which became Porsche. Meanwhile, Ferdinand’s daughter Louise married Anton Piëch, a Viennese lawyer; their son, Ferdinand Piëch, is now chairman of Volkswagen and has a seat on Porsche’s board. In the early 1980s, the Porsche and Piëch clans beat back an effort by an errant cousin, Ernst Piëch, to sell his shares to a Kuwaiti investor. Instead, the Porsches bought him out, which allowed Wolfgang Porsche’s eventual appointment as chairman years later. Four years ago, Porsche acquired a 20 percent stake in Volkswagen. Porsche’s chief executive, Wendelin Wiedeking, called the move defensive, and said that it was aimed at protecting one of his company’s most important partners from a hostile takeover. But as time passed, it became clear that Porsche wanted full control of VW, so that the tiny car maker could share the costs of developing new technologies with the much larger VW.
That reflected a conviction, recently articulated by Sergio Marchionne, the chief executive of Fiat, that only automakers that command economies of scale will survive in the global economy. In October, Porsche began an epic “short-squeeze” by announcing it had acquired shares and options equal to nearly 75 percent of Volkswagen’s stock. That forced hedge funds and traders who had sold the shares short — a process that involves lending them out — to buy them back at astronomical prices. For a brief period, VW was the world’s most valuable company. But, in retrospect, Porsche appears to have scored a pyrrhic victory. Getting the last 8 to 10 percent of Volkswagen may have been what broke Porsche, according to a person familiar with its finances, who requested anonymity because it involved confidential data. Porsche appears to have paid about 6 billion euros for that batch of stock, enlarging its debt load at precisely the moment that capital markets turned reluctant to lend money.
Now Wolfgang Porsche is having to accept Porsche’s integration into Volkswagen, rather than the hoped-for David-versus-Goliath takeover. And Porsche is seeking a loan from the German government and a cash infusion — from Arab investors. The company has started exclusive talks with the Qatar Investment Authority, the country’s sovereign wealth fund. The fund could acquire up to 25 percent of Porsche’s voting shares, which have long kept the Porsche family in charge. The Qataris, who would get a seat on Porsche’s supervisory board, may also purchase the options Porsche has on VW shares. Qatar could bring up to 5 billion euros ($6.9 billion) to the company, analysts estimate, helping to relieve the 9 billion euro debt load that Porsche incurred to acquire 50.76 percent of Volkswagen. To tide it over, Porsche has applied for a 1.75 billion euro loan from a fund the German government set up in March to help companies weather the financial crisis. The request is being reviewed in Berlin, with a response expected in days or weeks.
But even a Qatari investment or a loan from the government will not revive Porsche’s VW project, analysts said. “That scenario does not exist anymore,” said Daniel Schwarz, an automotive analyst at Commerzbank in Frankfurt. On May 6, Porsche and Volkswagen set a four-week deadline to create an “integrated” auto concern, but the deadline came and went amid some very public sniping from Mr. Piëch. The conflict centers on whether a fusion would simply make Porsche the 10th brand within the sprawling VW empire, or whether it would be a merger of equals. An alpha male who is known to create fear among his underlings, Mr. Piëch has made clear that the goal was to reel in Porsche on VW’s terms.
In mid-May at the unveiling of a new version of VW’s Polo, a small hatchback, Mr. Piëch publicly criticized Mr. Wiedeking and Holger Härter, the chief financial officer who masterminded cornering VW stock. The men were partly responsible for Porsche’s precarious financial position, Mr. Piëch said, and VW’s cash would come with strings attached. The statement stunned Porsche shareholders. Analysts say it is likely Volkswagen will now push harder to seize control of Porsche. “German law clearly says you cannot say things publicly that violate the overriding general interest of the company,” said Christian Strenger, a board member of DWS Investment, one of Germany’s largest fund managers.
“But Mr. Piëch apparently wishes to put Porsche on the ropes.”
By CARTER DOUGHERTY June 20, 2009 - NYT
FRANKFURT — When Wolfgang Porsche learned that his family’s sports car company would need an emergency cash infusion from its giant rival Volkswagen, he “went absolutely white.” “It was as though he’d heard someone died,” said one person briefed on the secret meeting between executives of the two companies. The meeting, at the offices of the governor of Lower Saxony state, where Volkswagen is based, effectively ended the company’s audacious bid for Europe’s largest automaker. It also was the beginning of the end of Porsche’s cherished independence. A day after the meeting, on March 23, fax machines around Germany spit out papers for Volkswagen’s board members to sign: an emergency loan of 700 million euros from Volkswagen, about $950 million at the time.
“This is becoming a reverse takeover on a financial level,” said Arndt Ellinghorst, head of automotive research at Credit Suisse in London. “Porsche has debt and VW has the luxury of cash.” Even amid the tumult that is the car industry these days, the story of Porsche and its overreaching ruling family is a singular drama. Its denouement was most likely prompted by Porsche’s taking out billions of euros in loans to acquire the last portion of Volkswagen that it did not own, enlarging its debt load at precisely the moment capital markets froze up. At heart, though, the role reversal — where Porsche turned from Volkswagen’s predator to its prey — is the latest scene in a family saga. “In the end, this is about clans,” said Stefan Bratzel, head of the automotive research center at the University of Applied Sciences and Economics in Bergisch-Gladbach, near Cologne. “It is the Porsche clan versus the Piëch clan who belong to a single familial line, but maybe that makes the conflict that much harder.”
Both families descended from Ferdinand Porsche, who created the Volkswagen Beetle in the 1930s. After World War II, Ferdinand’s son Ferry set up his own company, which became Porsche. Meanwhile, Ferdinand’s daughter Louise married Anton Piëch, a Viennese lawyer; their son, Ferdinand Piëch, is now chairman of Volkswagen and has a seat on Porsche’s board. In the early 1980s, the Porsche and Piëch clans beat back an effort by an errant cousin, Ernst Piëch, to sell his shares to a Kuwaiti investor. Instead, the Porsches bought him out, which allowed Wolfgang Porsche’s eventual appointment as chairman years later. Four years ago, Porsche acquired a 20 percent stake in Volkswagen. Porsche’s chief executive, Wendelin Wiedeking, called the move defensive, and said that it was aimed at protecting one of his company’s most important partners from a hostile takeover. But as time passed, it became clear that Porsche wanted full control of VW, so that the tiny car maker could share the costs of developing new technologies with the much larger VW.
That reflected a conviction, recently articulated by Sergio Marchionne, the chief executive of Fiat, that only automakers that command economies of scale will survive in the global economy. In October, Porsche began an epic “short-squeeze” by announcing it had acquired shares and options equal to nearly 75 percent of Volkswagen’s stock. That forced hedge funds and traders who had sold the shares short — a process that involves lending them out — to buy them back at astronomical prices. For a brief period, VW was the world’s most valuable company. But, in retrospect, Porsche appears to have scored a pyrrhic victory. Getting the last 8 to 10 percent of Volkswagen may have been what broke Porsche, according to a person familiar with its finances, who requested anonymity because it involved confidential data. Porsche appears to have paid about 6 billion euros for that batch of stock, enlarging its debt load at precisely the moment that capital markets turned reluctant to lend money.
Now Wolfgang Porsche is having to accept Porsche’s integration into Volkswagen, rather than the hoped-for David-versus-Goliath takeover. And Porsche is seeking a loan from the German government and a cash infusion — from Arab investors. The company has started exclusive talks with the Qatar Investment Authority, the country’s sovereign wealth fund. The fund could acquire up to 25 percent of Porsche’s voting shares, which have long kept the Porsche family in charge. The Qataris, who would get a seat on Porsche’s supervisory board, may also purchase the options Porsche has on VW shares. Qatar could bring up to 5 billion euros ($6.9 billion) to the company, analysts estimate, helping to relieve the 9 billion euro debt load that Porsche incurred to acquire 50.76 percent of Volkswagen. To tide it over, Porsche has applied for a 1.75 billion euro loan from a fund the German government set up in March to help companies weather the financial crisis. The request is being reviewed in Berlin, with a response expected in days or weeks.
But even a Qatari investment or a loan from the government will not revive Porsche’s VW project, analysts said. “That scenario does not exist anymore,” said Daniel Schwarz, an automotive analyst at Commerzbank in Frankfurt. On May 6, Porsche and Volkswagen set a four-week deadline to create an “integrated” auto concern, but the deadline came and went amid some very public sniping from Mr. Piëch. The conflict centers on whether a fusion would simply make Porsche the 10th brand within the sprawling VW empire, or whether it would be a merger of equals. An alpha male who is known to create fear among his underlings, Mr. Piëch has made clear that the goal was to reel in Porsche on VW’s terms.
In mid-May at the unveiling of a new version of VW’s Polo, a small hatchback, Mr. Piëch publicly criticized Mr. Wiedeking and Holger Härter, the chief financial officer who masterminded cornering VW stock. The men were partly responsible for Porsche’s precarious financial position, Mr. Piëch said, and VW’s cash would come with strings attached. The statement stunned Porsche shareholders. Analysts say it is likely Volkswagen will now push harder to seize control of Porsche. “German law clearly says you cannot say things publicly that violate the overriding general interest of the company,” said Christian Strenger, a board member of DWS Investment, one of Germany’s largest fund managers.
“But Mr. Piëch apparently wishes to put Porsche on the ropes.”
#4
hahaha good!!! I'm glad Porsche is getting taken over by VW. I have HATED the direction Porsche has taken since the late 90s, and the egos at the helm have led them to create **** cars for maximum profitability, whoring out the Porsche brand to fatten their wallets. I hope Volkswagen cuts down on Porsche's product line DRASTICALLY, relegates them back to a small niche sportscar manufacturer with VW financial backing (a la Ferrari to Fiat), and lets the engineers at Porsche run things instead of the bean counters who obviously soiled their own nest due to their arrogance.
This is a GREAT day for Porsche enthusiasts.
This is a GREAT day for Porsche enthusiasts.
#5
hahaha good!!! I'm glad Porsche is getting taken over by VW. I have HATED the direction Porsche has taken since the late 90s, and the egos at the helm have led them to create **** cars for maximum profitability, whoring out the Porsche brand to fatten their wallets. I hope Volkswagen cuts down on Porsche's product line DRASTICALLY, relegates them back to a small niche sportscar manufacturer with VW financial backing (a la Ferrari to Fiat), and lets the engineers at Porsche run things instead of the bean counters who obviously soiled their own nest due to their arrogance.
This is a GREAT day for Porsche enthusiasts.
This is a GREAT day for Porsche enthusiasts.
No more f*ing Cayennes
#6
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Join Date: Apr 2006
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^^^Gotta say I'd mostly agree. The company that makes the cars Porsche enthusiasts want is still there. Maybe this will bring them back. Maybe under a larger company Porsche will not be forced to make vehicles that don't fit the brand. Porsche is about sports cars and racing. This is what attracted most enthusiasts to the brand. I like the Cayenne and find the Panamera interesting but they ARE NOT what Porsche is about to the enthusiast.
#7
Race Car
[QUOTE=timothymoffat;6669027 Porsche is about sports cars and racing. This is what attracted most enthusiasts to the brand.[/QUOTE]
Yes sir, and well said.
Mike
Yes sir, and well said.
Mike
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#8
Rennlist Member
I hope Volkswagen cuts down on Porsche's product line DRASTICALLY, relegates them back to a small niche sportscar manufacturer with VW financial backing (a la Ferrari to Fiat), and lets the engineers at Porsche run things instead of the bean counters who obviously soiled their own nest due to their arrogance.
This is a GREAT day for Porsche enthusiasts.
This is a GREAT day for Porsche enthusiasts.
but I'm not sure how this changes much. VW is also a large corp, interested in profits. If Cayennes sell, they will make them. Right next to the Touareg. Same as today. Why wouldn't they?
Not really sure what this would change.
The only hope would be that VW management sees the Porsche line differently.
What makes this management better for the enthusiast? Mayne there is a reason to celebrate. I honestly don't know.
#9
Addict
Rennlist Member
Rennlist Member
Well, here goes - the Cayenne saved Porsche! Without the Cayenne there would be no Porsche today - kaput! So we may not like the idea but as a business Porsche was going under in the late 90's and the Cayenne saved it - along with the adoption of the Japanese manufacturing techniques. So, if we still want Porsche to continue we should be thankful for the Cayenne etc. I am still unhappy with the way Porsche treated racing over the past 10+ years - no cars at LeMans etc - and I think the best Porsche's are still the 993 variants (and yes I own a 993 and a 996TT-S). So if Porsche is to survive then they will do what they have to do. I strongly believe that a better day will come out of this change and as has been said - perhaps the engineers will be permitted to take charge again. Hope springs eternal.
#11
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That's what I thought too. Cheaper to build 993 sold well and improved Porsche's bottom line. Boxster a huge success, more of the same. 996 another huge success, more of the same, AND helped finance development of Cayenne(costs split with VW). Cayenne yet another success, improved bottom line yet again and at the same time led Porsche away from it's roots.
#13
Well it seems that the old man Ferry in making the company private back in the 70's maybe was a mistake. The old man wanted no squabbles between the families so he made the company private. The bickering continues between the cousins and VW+Audi will eventually takeover. They are winning all the races anyway?
#14
It's misguided to imagine that VW will do anything other than seek maximum profit from their altered association with Porsche, notwithstanding the reported rivalries between the Porsche and Piech families. One can expect more, not fewer, Cayenne-type projects. 911 adherents should be grateful for every Cayenne and Boxster that passes because the sales of these bread-and-butter models allows Porsche to build outstanding cars like the GT3.
Many 911 devotees appear to imagine that Porsche post-993 has in some way sold out - the fact is Porsche has always been pretty hard-nosed about making money; for a good example consider the changes to the cam-drive mechanism on the 993 motors, made purely for production convenience and to the detriment of engineering purity.
Many 911 devotees appear to imagine that Porsche post-993 has in some way sold out - the fact is Porsche has always been pretty hard-nosed about making money; for a good example consider the changes to the cam-drive mechanism on the 993 motors, made purely for production convenience and to the detriment of engineering purity.
#15
Instructor
Well. Maybe with VW running the show I can FINALLY get that US-designed/built but yet Porsche-branded minivan I've been dreaming about all these years!
From the perspective of product design, engineering (TDI only exception) & styling both companies have gotten seriously lost in the weeds for most of the double-naughts. It'll be interesting to see where they both go from here.
From the perspective of product design, engineering (TDI only exception) & styling both companies have gotten seriously lost in the weeds for most of the double-naughts. It'll be interesting to see where they both go from here.