Porsche Automobil Holding SE scales deal down
05-06-2009, 05:13 PM
#1
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Porsche Automobil Holding SE scales deal down
Original REUTERS LINK.
FRANKFURT, May 6 (Reuters) - Luxury carmaker Porsche Automobil Holding SE (PSHG_p.DE: Quote, Profile, Research) slammed the brakes on attempts to take over Volkswagen AG (VOWG.DE: Quote, Profile, Research) and instead agreed to explore a merger with Europe's biggest car maker.
The deal would represent a climbdown because Porsche is abandoning its goal of trying to dominate Volkswagen by building a 75 percent stake. It now owns about 51 percent of VW.
Details of the merger remain unclear, but Volkswagen and Porsche said on Wednesday they had agreed on a blueprint to create an "integrated car manufacturing group" within four weeks.
Under the new group, "10 brands shall stand below an integrative leading company," Porsche said in a statement. Until now VW and Porsche have been run independently with separate management.
Volkswagen has been in charge of nine brands -- Volkswagen, Lamborghini, Skoda, Bentley, Bugatti, Audi, Scania, Seat and Volkswagen Commercial Vehicles. Porsche Automobil Holding SE has run the sportscar brand independently.
The proposed merger follows a wave of consolidation in the auto industry, which has been hit by the global economic crisis. It has forced car groups Opel and Chrysler to seek new owners.
Porsche's existing shareholders would fund a capital increase of up to 5 billion euros ($6.7 billion) for the new company in 2009 or 2010, a person familiar with the matter said. Selling a stake to an outsider is not currently on the agenda, the person said.
The agreement to revamp Porsche's takeover follows a day of discussions among the families who control Porsche Automobil Holding SE, the Piech and Porsche clans.
They had gathered in Salzburg, Austria, to discuss how to cut a 9 billion euro debt mountain built up by Porsche to fund its bid for VW.
On Wednesday, Porsche said that following discussions on forging closer ties between the two companies, it aims to "develop a corresponding basis for decision-making on the future structure of the common group." Volkswagen welcomed the move.
The shape of a new company will be discussed by a VW-Porsche working group including the state of Lower Saxony -- where VW is headquartered -- as well as worker representatives.
Lower Saxony's premier Wulff said he is ready to enter talks about the future of Volkswagen. ($1=.7510 Euro) (Reporting by Hendrik Sackmann in Stuttgart and Edward Taylor in Frankfurt, editing by Gerald E. McCormick)
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OP Comment: In the end this may be the best for PAG and P-car fans. It may end up preserving Ferry Porsche's words:
Small & independent - circa '89 PCNA Ad
FRANKFURT, May 6 (Reuters) - Luxury carmaker Porsche Automobil Holding SE (PSHG_p.DE: Quote, Profile, Research) slammed the brakes on attempts to take over Volkswagen AG (VOWG.DE: Quote, Profile, Research) and instead agreed to explore a merger with Europe's biggest car maker.
The deal would represent a climbdown because Porsche is abandoning its goal of trying to dominate Volkswagen by building a 75 percent stake. It now owns about 51 percent of VW.
Details of the merger remain unclear, but Volkswagen and Porsche said on Wednesday they had agreed on a blueprint to create an "integrated car manufacturing group" within four weeks.
Under the new group, "10 brands shall stand below an integrative leading company," Porsche said in a statement. Until now VW and Porsche have been run independently with separate management.
Volkswagen has been in charge of nine brands -- Volkswagen, Lamborghini, Skoda, Bentley, Bugatti, Audi, Scania, Seat and Volkswagen Commercial Vehicles. Porsche Automobil Holding SE has run the sportscar brand independently.
The proposed merger follows a wave of consolidation in the auto industry, which has been hit by the global economic crisis. It has forced car groups Opel and Chrysler to seek new owners.
Porsche's existing shareholders would fund a capital increase of up to 5 billion euros ($6.7 billion) for the new company in 2009 or 2010, a person familiar with the matter said. Selling a stake to an outsider is not currently on the agenda, the person said.
The agreement to revamp Porsche's takeover follows a day of discussions among the families who control Porsche Automobil Holding SE, the Piech and Porsche clans.
They had gathered in Salzburg, Austria, to discuss how to cut a 9 billion euro debt mountain built up by Porsche to fund its bid for VW.
On Wednesday, Porsche said that following discussions on forging closer ties between the two companies, it aims to "develop a corresponding basis for decision-making on the future structure of the common group." Volkswagen welcomed the move.
The shape of a new company will be discussed by a VW-Porsche working group including the state of Lower Saxony -- where VW is headquartered -- as well as worker representatives.
Lower Saxony's premier Wulff said he is ready to enter talks about the future of Volkswagen. ($1=.7510 Euro) (Reporting by Hendrik Sackmann in Stuttgart and Edward Taylor in Frankfurt, editing by Gerald E. McCormick)
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OP Comment: In the end this may be the best for PAG and P-car fans. It may end up preserving Ferry Porsche's words:
Small & independent - circa '89 PCNA Ad
Last edited by ADias; 05-06-2009 at 09:12 PM.
05-06-2009, 09:37 PM
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Porsche's buildup to 51% of VAG was financed by credit, not cash. With the recent worldwide economic downturn, the debt service has become difficult to maintain.
The State of Lower Saxony owns 20.3% of VAG. That's why they want to be involved in talks.
The State of Lower Saxony owns 20.3% of VAG. That's why they want to be involved in talks.
Maybe our government will bail them out too.
05-07-2009, 01:06 AM
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don't worry abe. their government is in complete control - that's the "VW law" that gives the State veto power...
ultimately, porsche will still be able to bundle their production numbers with a parent organization (the integrated car company) that meets CAFE limits.
ultimately, porsche will still be able to bundle their production numbers with a parent organization (the integrated car company) that meets CAFE limits.
