Taxes Could Kill Porsche Deal

Bertel Schmitt
by Bertel Schmitt

Piech has a new enemy: The taxman. Volkswagen’s planned takeover of Porsche could be a taxable event to the tune of €3B, writes the Süddeutsche Zeitung.

As the derivative-wielding duo Wiedeking and Härter are surely aware of, there are ways to circumvent this nasty detail. VW’s CFO reportedly has shown the ways. However, this needs cooperation on both sides. The Porsche side seems to be uncooperative and happy about the tax issues. If a solution can’t be found, then “the deal is off” the Süddeutsche quotes a source, notably sitting on the Porsche board. A Porsche speaker also said that “there is a problem.” Apparently, a welcome one.

It affects high politics: Lower Saxony’s premier Christian Wulff already fingered Wendelin Wiedeking as the “irresponsible” instigator of the tax discussion. According to Der Spiegel, the tax matter will mean a further delay. The magazine does not expect a decision at the board meetings of both Porsche and Volkswagen, to be held 7/23.

For the first time, Wiedeking signaled that he might be on the way out. Süddeutsche‘s source on the Porsche board quoted Wiedeking as saying. “I cannot promise that I’ll stay if Porsche will be sold.” If Volkswagen succeeds in buying Porsche, he definitely won’t stay.

Germany’s Bild Zeitung now estimates Porsche’s debt at €14B. It used to be €9B, then more than €11B. Apparently, some of these derivative deals are going the wrong way. Porsche could be kaputt if not saved quickly.

Volkswagen’s ordinary shares were down 9.2 percent on the news, Porsche fell 7.9 percent.

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=""> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href=""> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.

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4 of 8 comments
  • Rcolayco Rcolayco on Jul 20, 2009

    OK, the old tried & true formula proven yet again . . . Greed (Piech) + Megalomania (Weideking) = Disaster

  • Lw Lw on Jul 20, 2009

    Unless a cash flow miracle occurs, seems like Porsche will get cheaper every day. Eventually it will be worthless and the tax problem will dissolve. If I were VW, I would walk away.. Make em' sweat and a cut last minute deal (with lots of tax incentive) to save Porsche from liquidation.

  • Rcolayco Rcolayco on Jul 20, 2009

    That's the way I'd go too, lw if I were VW. Can't recall now, but isn't that huge debt held by Porsche SE? If so, what the Porsche/Piech clan must now do is to surrender Porsche AG to VW and use the cash received from that to pay down Porsche SE's debt. . . and they end up with . . . zilch. Unless VW are prepared to issue shares to SE and absorb the debt. If the above makes sense, the Porsche's/Piech's may have no choice but to let the Qatar money in. In any case, this looks like a colossal misadventure that has left everyone (except the lenders, the Qatari and maybe the lawyers?) the loser. It just didn't have to be this way.

  • Willman Willman on Jul 20, 2009

    Wow, Wiedeking seems like one poisonous little dude! Lots of ego here, but his seems even worse than Papa Piech's. +I'm sure that Piech is probably making the taxman an offer he can't refuse as we speak.