Happy Couple: Volkswagen Finally Swallows Porsche

Bertel Schmitt
by Bertel Schmitt

They have been together for a while. Behemoth Volkswagen and tiny, but bigger than life Porsche shared technologies and booths at auto shows, Volkswagen generals are in key positions at Porsche. Fitting the German Zeitgeist, they lived together without being formally married. This will be rectified in a few weeks.

On August 1, 2012, the loose knot will be formally tied. Porsche SE will receive around €4.46 billion as consideration for contributing the 50.1 percent of Porsche AG not yet owned by Volkswagen. With that move, Porsche will formally become an integral part of the Volkswagen Group.

What stood in the way of a faster marriage were investment funds that brought suit against the Porsche SE holding company. The solution was to instead buy the sports car business that is handled by Porsche AG. Few outsiders understand the web of Porsche companies and acronyms anyway. However, that brought another problem: Taxes.

Buying Porsche AG normally would be a taxable event to the tune of approximately $2 billion. Volkswagen did not want to pay this kind of money. CFO Hans Dieter Pötsch’s accountants and lawyers went digging and found a passage in Germany’s Umwandlungssteuergesetz (Reorganization Tax Act) and the Umwandlungssteuererlass (Taxation of Reorganizations Circular). Porsche SE received one Volkswagen ordinary share in addition to the €4.46 billion, and voila, the matter was a tax-free reorganization.

According to a Volkswagen statement, “the consolidation of Porsche’s highly profitable automotive business, will have a positive impact on Volkswagen’s consolidated profit.” In this year alone, the company predicts a “clearly positive noncash effect of more than €9 billion in the Volkswagen Group’s financial result.”

Also, Volkswagen can count Porsche’s roughly 100,000 cars sold annually as its. It may not be much, but in the race to Volkswagen’s world domination, planned for 2018, every car counts.

Bertel Schmitt
Bertel Schmitt

Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.

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  • Joe This is called a man in the middle attack and has been around for years. You can fall for this in a Starbucks as easily as when you’re charging your car. Nothing new here…
  • AZFelix Hilux technical, preferably with a swivel mount.
  • ToolGuy This is the kind of thing you get when you give people faster internet.
  • ToolGuy North America is already the greatest country on the planet, and I have learned to be careful about what I wish for in terms of making changes. I mean, if Greenland wants to buy JDM vehicles, isn't that for the Danes to decide?
  • ToolGuy Once again my home did not catch on fire and my fire extinguisher(s) stayed in the closet, unused. I guess I threw my money away on fire extinguishers.(And by fire extinguishers I mean nuclear missiles.)
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