By on July 11, 2009

Wendelin Wiedeking has his deal with the Sheik of Qatar. The Sheik of Qatar wants to put down €7B for 20 percent of the Porsche Holding, and for their option package that buys the Sheik 20 percent of Volkswagen. “The deal has been finalized,” Automobilwoche [sub] heard from usually indiscreet German bankers.

The Sheik’s money would nearly wipe out Porsche’s debt load, leaving only €2B to pay off. It would also mean the end of more profits than sales through derivatives, and the end of Wiedeking’s dream to get more than the 51 percent of Volkswagen Porsche currently owns. Under the deal, the Sheik would own 20 percent of Volkswagen directly, and he would own indirectly 20 percent of the 51 percent Porsche owns. Still with us?

The deal may be finalized. But it isn’t closed yet. There still is the extraordinary supervisory board meeting, scheduled at Porsche for July 23.

At that meeting, board members will decide whether to approve the Sheik’s deal, or whether 49 percent of Porsche will be sold to Volkswagen. Anybody who follows the trials and tribulations of PJ O’Rourke’s favorite car maker has noticed that the Sheik raised his initial offer of €5B to €7B.

“Kein Problem” was the answer from Wolfsburg. According to Der Spiegel, Volkswagen now offers “substantially more than €4B” for 49.9 percent of Porsche. The magazine Focus consulted their CPA and he calculated that after taxes, the Volkswagen deal would bring a billion more into Porsche’s kitty than than the Sheik’s new offer. Also, it might sit better with Ferdinand Piech, who also sits on the Porsche board. Lower Saxony would also be pleased. Everybody except Wiedeking seems to like the Volkswagen offer. The Sheik could get a piece of the pie also. Lets not forget, he would need extra money to exercise those Volkswagen options.

“Whether Wiedeking’s future will be discussed at the meeting is unknown,” write the masters of insinuation at Der Spiegel. “There are rumors after rumors that Wiedeking will go shortly after Porsche’s matters have been settled.”

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8 Comments on “High Stakes Porsche Poker...”

  • avatar

    Maybe you need to be a little clearer here, Bertel.

    Because while both VW and Qatar want a piece of Porsche, they’re going after different Porsches.

    Volkswagen’s offer is for the carmaker Porsche AG, while Qatar’s offer is for the holding company Porsche SE.

    What Porsche would need most right now is time. Because the new VW law will fall eventually as well and then Porsche could go for Volkswagen’s cash reserves and settle all debts.

    So with that in mind, selling half of the Porsche AG to Volkswagen, only so that the Porsche SE can later take over Volkswagen and thereby take back full control of their car maker would make a lot of sense.
    The problem with this is however that Porsche AG is a collateral for the debts Porsche SE has. So by selling half of Porsche AG, Porsche SE’s credits would be callable immediately.

    Selling to Qatar would therefore be the safer option, although as you pointed out, it would mean that Porsche couldn’t take full control over Volkswagen, even after a possible fall of the VW law. Unless of course Porsche and Qatar came to an understanding that should the VW law fall, Qatar would vote in favor of a domination agreement between Porsche and VW.

    There’s also a third option that hasn’t been mentioned. Because apart from the Porsche SE and the Porsche AG, there is also the Porsche Holding GmbH. The Porsche GmbH is Europe’s biggest car dealer network and while it’s completely separated from both the Porsche AG & SE, it also belongs to the Porsche/Piech families.
    Many banks favor the idea that the Porsche/Piech families could bring the Porsche GmbH into the Porsche SE as a non-cash contribution. This would also buy Porsche some considerable time, while they could still keep all options on the table.

    And as a fourth option, the Porsche/Piech families could also pump a lot of their private money into the Porsche SE, but that is of course the least likely scenario. After all, nobody wants to part with their own, “hard-earned” money.

    All in all, the Qatar scenario seems to be the most likely one at this point, since that’s what Wiedeking wants and Wiedeking in return is backed by the Porsche family who controls the majority of the Porsche SE. On the other hand, Ferdinand Piech favors the sale to Volkswagen and the Piech family still holds a blocking minority. But if recent reports are to be trusted, Piech is even isolated within his own family regarding this deal, so we’ll have to wait and see whether he still has an ace up in his sleeve…

    However, if the two families can’t agree on either option 1 or 2, option 3 would all of a sudden seem to be very likely.

  • avatar
    John Horner

    Business wise, Porsche and VW should simply complete a 100% merger. They have been joined at the hip literally from the start, and all of this boardroom intrigue distracts from the serious and breathtakingly competitive business of designing, building and marketing cars.

  • avatar

    Under the deal, the Sheik would own 20 percent of Volkswagen directly, and he would own indirectly 20 percent of the 51 percent Porsche owns. Still with us?…At that meeting, board members will decide whether to approve the Sheik’s deal. Or whether 49 percent of Porsche will be sold to Volkswagen.

    I realized that I would never really understand corporate structure when I found out that pieces of IG Farben were still being traded almost fifty years after its liquidation.

  • avatar

    Wonder what is the motivation to go thru all these stepping on thin ice type of manuvre inorder to gain control of VW or Porsche vice versa?

    They wont make a car more cheaper or increase the profit margin. And they already own so much of each others, adding the Qatar to the equation only reduce their autonomy every time they want to do anything as they wish, they do have to get the Kosher of the Emir.
    But people if they had not failed they would not appreciate the phrase ” Leave the well enough alone”

  • avatar

    No soap opera has ever had as convoluted a plot as this. Someone could write a thinly disguised novel, with an eye toward selling the movie rights. It would be child’s play to add a few car chases, and you’d have a “major motion picture”, starring Brad Pitt and George Clooney. Bertel, wanna make some big bucks?

  • avatar

    Lorenzo: Hmmm, the book. A good novel needs sex, and there’s a lot of it. Piech’s answer to how many children he has is legend : “About twelve. You never can tell for sure.”

    But one has to be careful. Germany’s Wirtschaftswoche wrote that Piech fancies “gaudy neckties with hunting scenes.”

    Piech sued.

    In response, the magazine published a picture of Piech wearing a tie that showed a man with a gun in front of an elephant.

    Piech’s lawyers successfully argued it was a transport elephant, no hunting scene.

    The other side produced a picture of Piech wearing a necktie that depicted a fox and some kind of fowl.

    Piech’s lawyer argued that the fox may be engaged in peaceful play with the fowl, no hunting scene.

    The magazine lost.

    Car chases?

    The likewise German magazine Stern wrote that Piech drives “like a wild boar” and that “farmers worry about their chickens” when Piech is in the neighborhood.

    Piech sued.

    The judge disallowed the wild boar, the worries about the fowl were rendered as admissible.

  • avatar

    Bertel Schmitt:

    Hmm, Bertel. I’m finally getting your drift. Sorry to be so dense.

  • avatar

    high stakes porsche poker…hmmm, from the dress, it was strip poker

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