By on January 23, 2012

The Porsche-Piëch clan, ca. 1942. Grandfather Ferdinand Porsche, brother Ernst Piëch, sister Louise Piëch and mother Louise Piëch-Porsche. Ferdinand Piëch (nicknamed "Burli") is sitting in the grass on the left.

Volkswagen does not own Porsche yet. For all intents and purposes, however, Porsche is part of Volkswagen. Volkswagen executives give orders from Porsche board seats. Porsche engineers need to consult Volkswagen Group R&D departments. Insular solutions at Porsche require a written permission from Wolfsburg.

“Actually, Piech and his minion, Volkswagen CEO Martin Winterkorn, could leave it at that. The integration of both enterprises has progressed so far, that is does not make a difference whether Porsche morphs into a Volkswagen division, or remains legally independent.

Actually.”

So says Der Spiegel, which says the urge to merge has personal reasons. 74 year old Porsche patriarch Piech wants to join the companies that were started by his grandfather and namesake, Ferdinand Porsche.

In the way are international funds which sued Porsche for billions. Porsche made an offer of a few hundred million Euro, but the funds denied. With the lawsuits ongoing, the risk of buying a company that may have to fork over billions is seen as too high.

Now, Volkswagen’s legal department has developed a solution: Volkswagen could buy the remaining 50.1 percent of the Porsche AG and leave the Porsche Holding behind. The operative business is in the AG. Porsche has a corporate structure that makes a Russian doll look like simplicity. As long as Volkswagen will own “all of Porsche,” nobody will ask which Porsche.

Except the suing investment funds, perhaps.

 

 

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10 Comments on “Patriarch Piech Pursues Porsche For Personal Reasons...”


  • avatar
    ez3276

    Those wiley Germans. First they merge with Chrysler without merging and now Porsche.

  • avatar
    Fusion

    My knowledge of corporate law is very rusty (and never was all that great to begin with) – but I think Spiegel Online is wrong here.

    As long as Porsche (AG) remains a minority(!) owned subsidiary of VW, every cooperation project is gonna need a new written agreement. No company is allowed to give the other one preferrential treatment (e.g. better prices on parts, engineering services, etc.), because this would basically transfer money belonging to the investors of one company to the other company. Also, VW doesn’t get the money earned by Porsche, except for the dividends. There are a lot of small and big legal “details” that make control over a minority owned subsidiary expensive and partly impossible (see also the missing cooperation between MAN and Scania up until now…).

    Also – the Porsche corporate structure really isn’t all that complicated. There is Porsche SE – a holding company owned by the Piechs, Porsches, Qatar and a lot of small investors. This company owns the majority of voting rights in both Volkswagen and Porsche AG (the car making entity). The rest of the voting stock of Porsche AG is held by VW.

    • 0 avatar
      th009

      There is actually also Porsche Zwischenholding GmbH, of which VW owns 49.9%, and which owns 100% of Dr. Ing. h.c. F. Porsche AG. And there used to be the Porsche Holding Salzburg as well.

      • 0 avatar
        Fusion

        True, forgot about the Zwischenholding. Does complicate things a little. (Interestingly, iirc the Spiegel article originally suggested that the solution found was to have a “Zwischenholding” buying the Porsche shares – which is the way it has been done anyhow…)

        There still is a Porsche Holding Salzburg, which just is 100% owned by Volkswagen now. It never was any part of the corporate structure of Porsche (the carmaker) though, it used to be an entirely separate company sharing the same name.

        Also funny – the Spiegel article mentions potential synergies of around 700 million euros a year if the companys get closer, yet Spiegel says those are insignificant compared to the 127 billion in revenue. Basically shows the intention of the article – make it seem like it is all some sort of personal drama/soap story, when in the end there are very valid business reasons for it…

  • avatar
    stuki

    Once actual operational decisions at P starts being made by vanity seeking geezers, lawyers and finance dweebs, fat chance the kind of engineers capable of staying out in front will bother putting in the effort anymore. RIP, here P comes!

  • avatar
    Robert.Walter

    I always assumed that the reported rivalry between Dr. Piech and his cousin Wolfgang Porsche was for the benefit of the public, whereas in reality these guys were scheming for the universal benefit of their clan.

  • avatar
    Lorenzo

    Dang, I still think Bertel missed out on writing a book about this. As a novel, the twists and turns would blaze new ground, and the movie rights would have made Bertel rich. Clooney, DiCaprio, Cruise and Pitt would have paid to be in it. A slick lawyer could have assigned liability to the publisher, studio or insurance company.

  • avatar
    wallstreet

    Bertel reminds me of Grandfather Ferdinand Porsche.


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