Porsche, VW face uncertain, yet intertwined path, amid bids, counterbids for takeover

Porsche, VW meet amid dueling plans for takeovers

BERLIN — The boards of Porsche and Volkswagen meet Thursday in what could be a decisive moment in the battle over competing plans for takeovers and new investors. At stake is who will control what would be Germany’s most powerful auto maker.

The two company’s contrasting ranges of cars — from VW’s mass market Beetle and Golf to the Porsche’s sleek, expensive Porsche 911 — have been part of the fabric of Germany since the 1930s.

Volkswagen AG, Europe’s biggest car maker by sales, is chaired by Ferdinand Piech, a major shareholder in Porsche Automobil Holding SE, the company that owns Porsche AG. VW and Piech are pushing a deal that would see it take 49 percent of Porsche and fold the lucrative luxury-car business into its portfolio, widening its range as signs point to a renewal in the luxury market.

Porsche, which ran up heavy debts trying to take over VW, now wants to get help from outside investors to rescue its finances and, in a turnaround of fortune, has been resisting VW’s advances.

Neither Porsche nor VW will comment about Thursday’s separate supervisory board meetings in Stuttgart or what topics they will include, but one key issue is the independence of Porsche and the future of its chief executive Wendelin Wiedeking — credited with turning around the automaker in the 1990s but now weighed down by the failed attempt to take control of VW.

“Porsche’s management team go into this Thursday’s extraordinary board meeting looking increasingly likely to ask the company’s beleaguered chief executive Wendelin Wiedeking to relinquish his role,” said automotive analyst Tim Urquhart of IHS Global Insight.

German media have been bubbling with speculation that Wiedeking, in the top job since 1993, will be forced out.

The company has roundly denied such claims, but that’s done little to quell claims his time is running out. Speculation is strong that “Wiedeking will be the scapegoat for Porsche’s failed attempt to take over Volkswagen that has saddled the company” with debt, Urquhart said.

The problems stem from Wiedeking’s David-and-Goliath effort, beginning in 2005, to take over the much larger Volkswagen. Porsche eventually acquired 51 percent and — until the end of last year — was hailed for the move.

However, the global economic crisis put the brakes on luxury car sales — hampering Porsche’s push to increase its VW stake to 75 percent and, it hoped, take full control. It had also counted on the European Union to strike down a German law that gives the state of Lower Saxony, which holds just around 20 percent, unparalleled power to veto any changes or decisions. The EU did not do so.

Porsche tied up so many VW shares that, when traders needed shares in October to cover bets they had made against the stock, a so-called short-squeeze briefly pushed VW shares so high that it was, for a few days, the world’s most valuable company.

Porsche slammed on the brakes earlier this year, announcing its intention to create an “integrated company” with VW but leaving unclear how that might happen. Volkswagen balked and talks soon screeched to a halt.

Piech — a grandson of Ferdinand Porsche, who developed the Beetle in the 1930s and is regarded as the founder of the modern Porsche company — is viewed as a key figure in the drama. He has spoken in favor of a combined company being based in Wolfsburg, where VW is based, and is viewed as Wiedeking’s main opponent.

Piech’s counterpart as board chairman at Porsche is another Porsche grandson — his cousin, Wolfgang Porsche, who appears keen for the sports car maker to maintain its independence.

Now, Porsche Automobil Holding SE is in talks with a Qatar investment fund which has offered to buy a stake in the sports car maker by possibly buying Porsche’s options in VW since efforts to get credit, including a request for €1.75 billion from Germany’s state-owned KfW development bank, were rejected.

Analysts have said Qatar’s investment fund is offering Porsche about €7 billion in fresh capital.

On the Net:

www.volkswagen-group.de

www.porsche-se.com