Effective August 1, 2012, Volkswagen will take over all the remaining shares of Porsche that it does not already own, amounting to a 50.1 percent stake. In return, Porsche will receive a consideration amounting to around Rs 30,000 crore, plus one ordinary share of Volkswagen.
This merger comes on the back of an announcement last September that it would not be possible to implement the amalgamation of Volkswagen and Porsche on economically feasible terms before the second half of 2014. The two companies have since been exploring alternate ways of achieving their common goal of an integrated automotive group that can be implemented at an earlier point in time.
“The accelerated integration will allow us to start implementing a joint strategy for Porsche’s automotive business more quickly, to realise key joint projects more rapidly and hence to leverage additional growth opportunities in attractive market segments. It will also enable Volkswagen AG and Porsche AG to concentrate fully on their operating business by making day-to-day cooperation much simpler,” said CFO Hans Dieter Pötsch.
“The course we are following makes strategic sense and will bring sustained benefits for all stakeholders; it creates transparency as to future developments, and lays the foundations for swiftly intensifying cooperation between Volkswagen and Porsche AG. For Volkswagen, our sound financial and liquidity position and maintaining our strong ratings are also important, “said Pötsch.
There’s no news yet on what these ‘attractive market segments’ might be, but there will be speculation on whether the mooted VW-Porsche budget mid-engined roadster project could now be revived. The other possibility is an entry-level roadster developed with Audi.
The announcement ends an extraordinary period of conflict between the two brands, after Porsche spent more than three years trying to execute a stealthy takeover of the vast VW Group. In early 2009 Porsche had acquired enough shares in VW to have just over 50 per cent of the voting stake. At the time, the company said it was going to attempt to build its share to 75 per cent.
The audacious bid by Porsche was beaten off partly because the state of Lower Saxony owns 20 percent of VW shares and by VW Group supremo Ferdinand Piech, who is the grandson of Ferdinand Porsche, founder of the sports car maker. After the failure of the bid, Porsche was undermined by the then £7.3bn debts it ran up buying VW shares.
The deal has caused an outcry from some German politicians because VW will not have to pay a significant amount of tax since the deal has been classified as a ‘restructuring’.
Issue: 166 | June 2013
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