By on April 23, 2009

And the deals, they keep on coming. Bloomberg reports that the Porsche and Piech families “plan to sell their main car assets to Volkswagen AG under a plan that would tighten Porsche SE’s grip on Europe’s biggest automaker.” Hold it right there: Haven’t they just BOUGHT Volkswagen? Are we confused yet? This is how it works:


As we all know, Porsche is gobbling up Volkswagen. Currently, Porsche holds 51 percent of Volkswagen, and that’s all they need for now. If they would have 75 percent of Volkswagen, then according to regular German law, they could combine Volkswagen and Porsche, move the headquarters to Zuffenhausen and rule the world’s (currently, Q1 09 numbers) largest automaker from there. However, there is a special law, for Volkswagen only, that gives anybody who owns 20 percent of Volkswagen a blocking minority. That anybody happens to be the state of Lower Saxony. Nothing goes without their say-so. Lower Saxony would be damned to let one of their, if not the largest tax payer go to another state. The matter is heading to the European court again, but their wheels grind slowly. Porsche doesn’t have that time. Actually, Porsche is getting short of money.

Yesterday, Automobilwoche [sub] reported that Porsche is looking for a large investor with deep pockets. The sugar daddy is supposed to “solve the financial problems surrounding the takeover of Volkswagen. The Porsche/Piech families can’t do it alone.” Reports in Germany are talking about potential Saudi-Arabian investors, the preferred partners of makers of high end gear.

But now, there is a better plan: Porsche, the family, sells Porsche, the car company to Volkswagen, which the family already rules. In return, they get VW shares they want and cash they need. “As part of the transaction, Porsche SE will issue new shares, a portion of which may be sold to external investors,” Bloomberg says.

Of course, the official party line is different. It’s the dreaded S word: Synergy. “We’re both capable of forming the center of strength in international carmaking,” Winterkorn said at VW’s annual shareholders’ meeting in Hamburg. “This alliance has enormous potential in technological and economic terms.” Winterkorn is obviously vying for a job as a stand-up comedian. In the first half of the 2008/2009 fiscal, Porsche sold just 34,266 units worldwide. Volkswagen made more than 6 million. They could crank out the worldwide Porsche production over a long week-end.

What’s more, a lot of the Porsche production is already intermeshed with VW. Volkswagen and Porsche already work together to build sport-utility vehicles and Porsche has tapped VW to assemble its Panamera four-person sedan. The companies also cooperate on SUVs such as Touareg, Cayenne and Audi’s Q7. No, Siree, synergies have nothing to do with it. If Porsche can’t swallow Volkswagen, then a Volkswagen owned by Porsche will swallow Porsche. It’s that simple. Even if it sounds confusing.

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22 Comments on “Volkswagen Buys Porsche After Porsche Bought Volkswagen...”


  • avatar
    Paul Niedermeyer

    Sounds fairly brilliant to me. Who would have imagined ten or fifteen years ago that Porsche (Porsche family) would find a way to own/control VW?

  • avatar
    Stingray

    @ Bertel.

    Your selection of pictures for the articles is dead on.
    On this one… just by reading the title… and in the editorial about VW’s “Reich”.
    Good job.

    Although is confusing… I agree with the comment above.

    These guys rock.

    Mr. Niedermeyer, I think the move was a matter of time and quite logic. Grandfather Ferdinand designed the very first VW, his first branded name were based on that design. I don’t know how to explain it, but is like a family jewel that was “borrowed” to someone for some time… eventually has to come back.

  • avatar
    superbadd75

    VW going back to the family that founded it. That’s pretty cool, but it is damn confusing, and I still don’t see how it’s going to fix anything. Other than give Porsche money. Which I also don’t understand, as I thought they were the most profitable automaker in the world not long ago. Oh well, go VW.

    Does this mean that the little VW mid-engine sports car concept (Blue Sport?) is toast? That sucks.

  • avatar
    no_slushbox

    So the Porsche holding company exchanges some ownership of Porsche the automaker to VW in exchange for VW stock and Porsche holding company increases its stake in VW to 75% without paying any money.

    But Lower Saxony still has 20%, so how does this get around VW law?

    Does VW issue new shares to buy Porsche the automaker, therefore dilluting Lower Saxony’s stake below 20%?

    If so why not just have a VW stock offering, it would raise money and accomplish the same dillution.

  • avatar
    lutonmoore

    All I wanna know is, why can’t Porshe bring back some kind of 914? I’d die for one of those new…

  • avatar
    no_slushbox

    superbadd75:

    “VW going back to the family that founded it.”

    Wow, this is completely new news. You mean they’re giving VW back to Hitler’s family?

    Ferdinand was just the guy that took stolen Tatra designs, slightly modified them to Hitler’s tastes, and then put the Reich’s VW logo on them.

  • avatar
    Paul Niedermeyer

    @Stingray,

    I totally get the desire to reclaim the family jewel, although Porsche really never owned it at all. The original Kdf/VW was a Nazi (fascist) government-owned enterprise. I’m just amazed/impressed that they pulled it off, given the size disparity.

  • avatar
    Stingray

    @ Paul Niedermeyer

    Yeah, they never owned the company, but the design is “theirs”.

    I’d put “soul” instead of design. And I guess that’s what truly counts for them.

    It’s surely amazing, but remember the financial machinations of Porsche during the last years and it starts making sense. Even as near as last year. Given that, the size disparity starts to matter less.

  • avatar
    tom

    Actually it’s not that difficult. What’s confusing is merely the names.

    The “Porsche Automobil Holding SE” (not to be confused with the “Porsche Holding GmbH”, one of the biggest car dealer networks in Europe and also owned by the Porsche/Piech family) owns 100% of the “Dr. Ing. h.c. F. Porsche AG” as well as 51% of the “Volkswagen AG”.

    Combining the car business under one roof would make sense anyway, so why not sell Porsche to Volkswagen in return for more Volkswagen stocks.

  • avatar
    Kurt.

    @lutonmoore,

    They did. It’s called the Boxter.

  • avatar
    Yair Barojas

    Hmm…who would’ve thought. Sounds confusing alright but in the end it makes sense. I bought most shares, now I ran out of money, so i’ll sell them back to you! Synergy in action….yeah right.

  • avatar

    Kurt. Porsche doesn’t have the balls to drop an oelmotor into a Boxtser. The Porschephiles already deride the Boxster as a ‘chick car’ as it is. Of course straying from their brand [cough!]Cayenne[/cough!] is what made Porsche rich enough to buy VW in the first place, so maybe I’m wrong.

    –chuck

  • avatar
    pariah

    Porsche: The Smartest Guys in the Room

  • avatar
    tced2

    It sounds like the financial equivalent of the perpetual motion machine.

  • avatar

    The phrase is Charlie Foxtrot

  • avatar
    Guzzi

    Nested dolls: nice. Shell game: better.

    This is why I liked it much better when there were two Germanies.

  • avatar
    niky

    no_slushbox :
    April 23rd, 2009 at 10:41 am

    So the Porsche holding company exchanges some ownership of Porsche the automaker to VW in exchange for VW stock and Porsche holding company increases its stake in VW to 75% without paying any money.

    But Lower Saxony still has 20%, so how does this get around VW law?

    Does VW issue new shares to buy Porsche the automaker, therefore dilluting Lower Saxony’s stake below 20%?

    If so why not just have a VW stock offering, it would raise money and accomplish the same dillution.

    I think share dilution is the whole point.

    If you have a new share offering, you’d better have new product to back it up… and not even VW is immune to the sales slowdown.

    But selling Porsche completely to VW, which they can approve with their current board majority, avoids the need to build a new brand, model or line… Porsche itself may be seeing a sales slump, also, but it’s an existing company that actually has sales.

    It’s a brilliant move. The poor Lower Saxons won’t know what hit them. Well… they’ll know, but they won’t be able to do much about it.

  • avatar
    JJ

    Ah, those pesky credit problems that come with growth and investment…

    This move ranks somewhat lower on the awesomeness scale then some of their previous exploits, but still, kind of cool.

    I hope this whole thing won’t come crashing down on the Porsches/Piëchs in the unfortunate event that Veedub finds itself to be the current GM in a decade or maybe two, though. But I’m sure that even then they will by that time have substracted plenty of goodies from the company.

    Anyway, always a supporter of attempts to try and take over the world (well, not always, but in this case, great going).

    The most important question this raises however; will Porsche press cars (at introduction) now sport ‘WOB’ for the first 3 characters on the german license plates or will they stick with the usual ‘S’?

    (I’m not exactly sure how the system works here with the neighbours, but the first characters designate the place the owner of the car is registered I think, sometimes it’s clear to me as in WOB–> Wolfsburg, M –> München, but sometimes it isn’t.)

  • avatar
    tom

    The most important question this raises however; will Porsche press cars (at introduction) now sport ‘WOB’ for the first 3 characters on the german license plates or will they stick with the usual ‘S’?

    Of course they will stick to the ‘S’. Porsche is located in Stuttgart and it will remain there. Audi for example usually uses either ‘IN’ (for Ingolstadt) or sometimes ‘HN’ (for Heilbronn where NSU was located until it was bought by Audi).

  • avatar

    (I’m not exactly sure how the system works here with the neighbours, but the first characters designate the place the owner of the car is registered I think, sometimes it’s clear to me as in WOB–> Wolfsburg, M –> München, but sometimes it isn’t.)

    In Germany, the first letters of the plate indeed designate the city or the county (Landkreis) where the car is registered. This also serves as the basis for derogatory remarks about the holders of such tags. “OF” (as in Offenbach) stands for “Ohne Führerschein” (without driver’s license) if you ask the good folks in neighboring F as in Frankfurt. People in M as in Munich sometimes claim that “FFB” doesn’t stand for neighboring Fürstenfeldbruck, but for “Fahrer fährt besoffen” (driver drives drunk.) Having been raised in said county, I must protest.

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