By on June 28, 2009

A week ago, we predicted that Volkswagen, buoyed by stellar numbers, would soon swat nuisance Wiedeking once and for all. It didn’t take long. Ferdinand Piech, chairman of the supervisory board of Volkswagen and co-owner of Porsche, pulled out a big gun and put it to the head of Wendelin Wiedeking, CEO of Porsche (and theoretically Piech’s employee). Piech said (we are paraphrasing in the interest of brevity): “Say uncle by Monday. Or you’re dead.” Nice family.

According to Der Spiegel, VW and the state of Lower Saxony set Wiedeking a deadline. If he doesn’t accept the offer by Monday, Porsche’s already dire financial situation will become untenable.

The joint ultimatum goes like this: VW buys 49 percent of the Porsche AG for anywhere between €3 and €4 billion. The money goes to the Porsche Holding, of which Piech owns a good chunk. As a next step, the Emir of Qatar will buy the options for 25 percent of VW stock, which are held by the Porsche Holding. Then, VW and Porsche will merge.

When everything is said and done, the Porsche/Piech families will end up owning more than 40 percent of VW-Porsche, Lower Saxony will keep its 20 percent, Quatar will have 15 percent, another unnamed sovereign wealth fund (any guesses?) will hold five percent. Less than 20 percent will be publicly traded, which should keep the stock scarce and high.

This plan is the joint work product of VW CEO Martin Winterkorn, VW CFO Hans Dieter Pötsch, Lower Saxony’s Premier Christian Wulff and of course Ferdinand Piech. Der Spiegel didn’t name sources for the story. The details of the transaction are fine grained. There must be a big leak in the executive washroom on the top floor of the Volkswagen Hochhaus.

What if Wiedeking says no? Will he find the head of a horse in his bed? This is Germany, and the dealings are more subtle: If he says no, VW will recall its €700 million loan they had given Porsche last March to save them from bankrutptcy.

Should it come to that, the Emir of Qatar will walk. He made clear that he’s only interested in a Porsche-VW company where the owners share a common goal and are off each others’ throats. With the Emir gone and the loan recalled, Porsche AG (the car company) is DOA. If Wiedeking gives in, his job is DOA.

The story jibes with the information collected by the Süddeutsche Zeitung. Bankers told the SZ that Qatar has its eyes on big Volkswagen. They were only talking to little Porsche to get their hands on the VW options. To sweeten the deal, Qatar could deliver a chopped head to Wolfsburg: Wiedeking’s. Qatar doesn’t want to “fight with Wiedeking against the rest of the world.” To win over Piech and Lower Saxony, Wiedeking has to go. Judging from the ultimatum, Piech, Lower Saxony, and Quatar are already in agreement.

There is no other white knight that may ride to Porsche’s rescue. Daimler was rumored to be interested. Today, Daimler’s Zetsche gave Die Welt an interview and Porsche the cold shoulder: “If we would be interested in Porsche, we would tell them.” And: “Porsche is closely integrated with Volkswagen’s activities. It doesn’t make sense contemplating to replace this integration with another one.”

Zetsche also intimated that Porsche had leaked the possible link-up with Daimler: “I can understand that spinning the same story again and again can get boring. One likes to drop other names.” In other words: Porsche, get lost. Daimler has its own problems.

So what’s left for Porsche? All they can do is fume.

“Porsche’s chairman is furious with Volkswagen AG. Wolfgang Porsche said in a statement Saturday that the sports car maker would not be “blackmailed” into a merger with VW,” Automotive News [sub] writes.

More than miffed, Wolfgang Porsche flames in the direction of Wolfsburg:

We are deeply concerned and irritated by the wording of the ultimatum. The 21st century is not the time for ultimatums. We wonder what the whole matter is really about and whether the focus is still on our common cause at all.

We will not give in to such pressure or blackmail. Such action does not help anybody. It is detrimental to the entire cause. This is not the way to support and uphold common interests.

We sincerely hope that the perpetrators of the ultimatum, in consideration of our common interests, calm down again and follow up their proposals in internal discussions and not through headlines. We are open to such talks at any time.

The missileve was co-signed by Uwe Hück, Wolfgang Porsche’s deputy on the board and representative of the worker’s council. Workers and managers, unite! They must have been close to tears when they wrote this. All smugness is gone. The strongly worded protest confirms that Der Spiegel has its details right.

On Friday, Porsche had bragged it was close to reaching a deal with Qatar. At the same time, Qatar, Piech, and Lower Saxony got a little cozier. Now, all that’s left to Porsche is to whine and to invoke noble principles. It won’t work.

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21 Comments on “Editorial: Volkswagen’s Piech Blackmails Porsche’s Wiedeking: Deal by Monday or Die...”


  • avatar
    Davekaybsc

    Poor Porsche. They had everybody fooled, and had all the money in the world, and they blew it all.

  • avatar
    Robstar

    If Porsche goes bankrupt does that mean I can pick up a 911 on the cheap?

  • avatar
    mpresley

    Unlike the US government, where the Fed can buy T-Bills and thus simply “create” dollars, Porsche cannot and must therfore submit to its masters. It’s a good thing we in the US aren’t like Porsche, or we’d all be learning to speak Chinese.

    Wonder who the other unnamed sovereign wealth fund are? Will these lucky chaps be able to purchase their Bugatti on the cheap, for their next ride into the hot desert?

  • avatar
    rcolayco

    This episode is beginning to take on the flavor of the Mosley/FOTA war. Letting it go on for much longer is not in the interest of the business & ultimately the motoring enthusiasts who’ve come to trust in the Porsche product.

    I can’t help but wonder about Wolfgang Porsche. Wiedeking’s megalomania couldn’t have taken things this far without his support. Has he smarted all along that his cousin Ferdinand Piech ran a far larger empire?

    Tsk tsk. Not good.

    I hope all the necessary blood-letting will get done in the coming week so business can move on.

  • avatar
    NickR

    Mmmmm, fresh jerky. Do Porsche drivers eat jerky?

  • avatar
    John Horner

    “We are deeply concerned and irritated by the wording of the ultimatum.”

    This from the people who were recently crowing about sticking it to the hedge funds? I hope Google translate got this right :) … “Gute Nacht sagen, Gracie”.

  • avatar
    ra_pro

    In the interest of full exploration of possible options. Would it be possible for Porsche to threaten possibly even go to bankruptcy and get the German government bailout? I realize that in the longish run Porsche needs a partner/parent but just to escape the humiliation of VW ownership, or would bankruptcy be a much bigger humiliation?

  • avatar
    John Horner

    ” … to escape the humiliation of VW ownership … ”

    Porsche and VW have been joined at the hip throughout their history. The legal nature of their marriage has ebbed and flowed, but they might as well get married and put the question to rest.

  • avatar

    The German government has already said no to a Porsche bailout. A credit application to their KfW bank has been denied twice so far.

    If an Opel bailout with many jobs at stake creates a political backlash, the bailout of a company that makes pricey sports cars and who’s CEO is the highest paid on the planet would create a revolution.

    Their will be no government bailout of Porsche.

    There is nothing humiliating in a VW ownership of Porsche. This is about which side of the family rules VW-Porsche, the Piechs or the Porsches.

  • avatar
    carlos.negros

    What is Porsche anyway? They have taken the worst aspects of the brand and magnified them. The Cayanne, Pana_bananarama, exploding Boxster camshafts – ouch, my bank account.

    If the Prius whispers “I am aware of my own use of resources and I care,” Porsche and Hummer scream, “rape the world, fuck everyone but me.” Who would want to be seen in a Porsche anyway? Wayne Newton? Dick Cheney? I guess I could see Mark Sanford driving one along the Buenos Aires Coastal highway, his spicy tango partner by his side.

  • avatar
    ZoomZoom

    I found the pic very funny, especially because it’s an oxymoron. Really, the curing process is like 30 days in a salt barrel, yes? Can anything that’s a month old (or more) be called “fresh”?

    Can somebody help me with the proper pronunciation of “Piech”? Is it “peech” (like the fruit), “peesh” (the fruit with a lisp), or “pie ch” (rhymes with “pie” and “bye”)? Or something else?

    Thanks.

  • avatar
    Morea

    Add to this that not one 997 went the distance in the 2009 24 Hours of Le Mans and you have the makings of a bad year indeed.

  • avatar

    Wow. My head is spinning. And somewhere in hell, Machiavelli is having a laugh. -Think I’m going to go reread this saga another 3x.

    hrm, …I guess Wiedeking hasn’t learned the “Don’t f*&k with Piech”-lesson yet, eh?

    +@ZoomZoom: I think Piech is pronounced: Peeyehchch (the hchch is like a Hebrew chai sound, like you’re hocking up a loogie)

  • avatar
    ZoomZoom

    Thanks, William.

    Though I almost swallowed a tonsil trying that!

    I can see the headlines now.

    “The Truth About Cars Chokes Man to Death!”

    Or “The Truth Shall Set You Free”

  • avatar

    @ZoomZoom: Hehehe. Piech said that way does sound like some PTUI-esque spitting, glottal, insult aimed at an adversary’s feet, non??
    ++ Try that pronunc. when you’ve got a wicked cold. Just don’t aim at any loved ones. :D :D :D

    (supposedly south american grannies can peel the paint off walls by screaming ARRRRRRCHCHCHCHCHCHCHCHCHCHCHCHCHHHHHH-ENNN-TEEENA!)

  • avatar
    kaleun

    It will be interesting to see which companies will merge or be forced to cooperate more or just disappear in the next few years. There sure is a trend to fewer companies and brands and the current crisis only accelerates this.
    I think Porsche has always been too small and their profits too dependent on a “good economy” to really take over VW. All their money came from unreal “Wall Street” profits… and we know where they went. If they really were rich they didn’t need no stinkin loan…

    I think Fiat’s CEO is right with his assessment that there only will be 6 car manufacturers left with 5 million cars/year or more. I’m sure VW will be one of them, Porsche doesn’t even have 1 million cars and will be lucky to be part of VW to survive. Even BMW and Mercedes are subject to merging or disappearing if they are not careful.. All sportscar manufacturers either disappeared or belong to a larger company now. Porsche was the only one left. Not even really, they cooperated a lot with VW already, why not make it official? It didn’t hurt Bughatti…

  • avatar
    blowfish

    the US aren’t like Porsche, or we’d all be learning to speak Chinese.

    Just never say never, atleast my mother tongue is Chinese I no need to learn more tongue twisters.

    If I have to make a choice I mind as well walk the Plank as Capth Bligh’s wishes.

  • avatar
    Lichtronamo

    “Mr. Wiedeking,” said Dr. Piech, “here is your ass”.

  • avatar

    Kaleun:

    Porsche doesn’t even have 1 million cars and will be lucky to be part of VW to survive.

    According to the latest OICA data, Porsche produced 96,721 cars in 2008.

  • avatar
    agenthex

    I think Porsche has always been too small and their profits too dependent on a “good economy” to really take over VW. All their money came from unreal “Wall Street” profits… and we know where they went. If they really were rich they didn’t need no stinkin loan…

    The same lesson was perfectly taught during the net/telcom boom a decade ago and likely countless times before.

    The only principles Machiavelli needed were that history repeats itself so you really only need to learn it once.

  • avatar
    amca

    Overall, I don’t care how this comes out. Just so long as they don’t f*ck up the 911.


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