Yesterday, Porsche went through more mood swings in a single day than a manic depressive in three months. In the morning, Munich’s Süddeutsche Zeitung, usually well clued into high level auto gossip in Germany, had the good news that the public prosecutor in Stuttgart had dropped most of the investigation into former Porsche CEO Wendelin Wiedeking and former CFO Holger Härter. Supposedly, no evidence of share price manipulation was found. With that out of the way, the formal amalgamation of Porsche into Volkswagen could now progress at full speed, said the paper. However, they were misinformed.
Later in the day, it became known that only half of the share price manipulation probe was dropped. The duo is still a target of preliminary proceedings for having withheld pertinent information. To make matters worse, the prosecutor opened another inquest against Wiedeking and Härter for embezzlement.
Late on Wednesday evening, Porsche issued a bleak statement. The new situation definitely delays, possibly derails the fusion of Volkswagen and Porsche, the statement said. “From the management board’s view this also reduces the probability that the merger can be achieved under the timeline of the basic agreement from previous 70 percent to 50 percent.”
The man who holds the future of Porsche in his hands is Siegfried Mahler. He heads the public prosecutor’s office in Stuttgart. He declared that the proceedings will “surely drag on well into 2012.”
Please note that what is delayed is the legal part of the merger. Once Volkswagen formally owns Porsche, Volkswagen is exposed to any claims against the company. As long as they don’t formally own Porsche, Volkswagen’s deep pockets are off-limits to any litigants. Volkswagen will wait until any potential claims go away. Otherwise, Volkswagen and Porsche are for all practical purposes merged.
Says Der Spiegel: “VW CEO Martin Winterkorn wants to integrate Porsche into the group as the tenth brand. The legal problems notwithstanding, these plans are unlikely to change. In the event of a failed merger, Wolfsburg could buy the remaining Porsche shares outright.” At a greatly reduced price, that’s for sure.