Porsche Now Holds a Controlling Stake in Volkswagen
By Chris Haak
09.16.2008
Porsche Automobil Holding SE, the holding company that Porsche AG created to hold its automobile holdings, announced today that it has acquired an additional 4.89% of Volkswagen AG, bringing its total voting stake in Europe’s largest automaker to 35.14%, and therefore holds a controlling stake in VW.
Further, Porsche now is legally required to make a tender offer for VW’s Audi subsidiary, although the Porsche CEO Wendelin Wiedeking said that his company has no intention of spinning off Audi as a separate company, saying, “We see Audi as an integral part of VW group and have no interest in taking the company out of the group.”
Porsche also confirmed what it had previously stated, in that it expects to continue to increase its stake in Volkswagen until it exceeds 50%, calling today’s milestone yet another step toward that objective.
All is not rosy in the boardrooms at either Porsche or VW these days, however. Porsche’s takeover of Volkswagen is rather vigorously opposed by labor representatives on VW’s supervisory board (under German law, a portion of each public company’s supervisory board consists of labor representatives). Further, VW’s home state of Lower Saxony, which still holds a 20% stake in VW, feels that its stake should entitle it to have veto power on important decisions, while Porsche feels that veto power should only come with a 25% or greater stake.
The soap opera doesn’t end there. According to a report released over the weekend by German magazine Focus, Porsche chairman Wolfgang Porsche has gained support from the two families that own the carmaker that bears his name to remove his cousin and current Volkswagen Chairman Ferdinand Piëch from his position atop VW. Porsche was angered by Piëch’s abstention in a crucial boardroom vote on a resolution proposed by VW’s labor representatives that required board approval of any cooperation between Porsche and Audi; Piëch’s non-vote allowed the resolution to carry, and complicates Porsche’s takeover plans, much to the delight of VW’s labor representatives.
Where will all of this end? Porsche will get its control of the Volkswagen Group (including Audi), nobody will accept the mandatory tender offer for Audi shares (because it’s priced below market value), Piëch will probably retire, and Porsche will take over the world Volkswagen with a 50% stake in the next few months. And Porsche will continue diluting its brand with overweight SUVs and an upcoming overweight front engine, V8-powered sedan (the Panamera), while also asking its already stretched management to oversee Volkswagen, a company that’s on the upswing at the moment in most places, but that has some immense aspirations for the next decade that will take perfect execution, and a lot of luck, to come to fruition.
You can’t make this stuff up.
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