Editorial: Volkswagen's Piech Blackmails Porsche's Wiedeking: Deal by Monday or Die

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.