In late July Porsche announced Wendelin Wiedeking would be leaving his position as the company’s CEO to be replaced by Michael Macht, clearing the way for the supervisory board at Volkswagen to lay the foundation for an integrated company with Porsche under Volkswagen leadership.

This week, Volkswagen announced that it will take a 49.9 percent stake in Porsche, in a first step towards an integrated automotive group with the sports car company. This was agreed between Volkswagen and Porsche during negotiations on the contracts of implementation relating to the merger of the two companies.

The timetable for the creation of the integrated group remains unchanged: Volkswagen will acquire a participation in the operating business of Porsche by the end of 2009. The merger of the companies is still scheduled to take place during the course of 2011.

Based on the enterprise value calculated for Porsche, Volkswagen is expected to pay approximately €3.9 billion (R44.1 billion) for the participation in the company.

For worried Porsche fans, Volkswagen has stated that it remains committed to the phased integration of the two companies and to preserve the independence and the interests of Porsche.

Adapted from MotorAuthority

Europe’s largest automaker, Volkswagen, and Porsche announced at the end of last week that they reached an agreement to merge their operations to create an integrated automotive group led by VW. Under the agreement, Volkswagen will buy a 42 percent stake in Porsche’s automotive unit by the end of 2009. The merger, which will see the creation of a group with 10 brands, sales of around 6.4 million vehicles and more than 400 000 employees, will be achieved in several stages, and is expected to be completed by 2011.

According to VW, Porsche will remain an independent company headquartered in Zuffenhausen. “As is the case today with Audi and other successful group brands, Porsche will retain its identity, while at the same time benefiting from its membership of the integrated group,” said VW in a statement.

“Volkswagen and Porsche today took a decisive step towards a joint future. As a group with now ten, strong, independent brands, we will further expand our unique global position,” said Martin Winterkorn, Chairman of Volkswagen’s Board of Management.

“More than ever before, we now have what it takes to become the automotive industry’s number one. Volkswagen is systematically continuing its successful multibrand strategy by integrating Porsche. Additional new growth opportunities will emerge for Porsche under the umbrella of the integrated group,” Winterkorn added.

Interestingly, it was Porsche that had been trying to take over Volkswagen that past few years as the Stuttgart sports carmaker had built a 51 percent stake in the German group and was aiming to increase it to 75 percent.

However, at the same time Porsche built a debt of nearly 10 billion euros, or around US$14 billion, as the automotive market was hit by the ongoing financial crisis, leading to the departure of Porsche CEO Wendelin Wiedeking and forcing the company to seek help from VW.

Adapted from CarScoop

Volkswagen is planning to purchase all of sports carmaker Porsche, which has run into massive financial problems linked to its overly ambitious plan to take control of VW. The attempted takeover, which had been financed using loans, ultimately failed because of the credit crunch and ensuing liquidity problems that almost saw Porsche go bankrupt.

Volkswagen is reportedly planning a complete takeover of the beleaguered sports carmaker in a series of two transactions. The company is planning the imminent purchase of 50 percent of Porsche shares and will purchase the remaining shares in the Stuttgart, Germany-based automobile manufacturer in a second step. Once completed, Porsche will become the 10th brand in the stable of Volkswagen, the world’s largest carmaker.

VW’s move to acquire Porsche follows a power struggle between the companies. Porsche had sought to buy VW through complicated loan transactions that collapsed when the sports carmaker’s liquidity dried up as a result of the credit crunch. It has already been reported that Wolfsburg-based VW would purchase 49.9 percent of Porsche, but we’ve now learned it is planning a complete acquisition in a second purchase of shares.

The deal envisions a payout to Porsche Automobil Holding of €8 billion (US$11.3 billion), enabling it to pay off the bulk of its crippling debts. VW is also considering acquiring Porsche’s Salzburg-based network of dealerships from its family owners, a move that could raise an addition €3 billion for Porsche.

Under the deal, the Porsche and Piëch families, Porsche’s shareholders, would obtain 50 percent of the shares in the merged VW-Porsche company. The western German state of Lower Saxony would maintain its 20 percent holding in the company and the door would be open for the emirate of Qatar to purchase between 14.9 percent and 19.9 percent of the company’s shares.

Reports last week stated that the Porsche and Piëch families had agreed to accept the Volkswagen deal and that the deal was now backed by Porsche supervisory board chairman Wolfgang Porsche, who had fought to maintain Porsche’s independence from VW.

The reports also stated that Porsche’s current CEO, Wendelin Wiedeking, would step down and that the families had agreed to replace him with Porsche production chief Michael Macht.

Wolfgang Porsche denied the report on Friday evening, rebuffing “speculation” that Macht would succeed Wiedeking. Wiedeking, he said, remained head of Porsche AG and Porsche Holding. Deputy chairman of the board and works council chief Uwe Hück also defended Wiedeking. “Wiedeking is chairman of the board and he will continue to be so,” he said.

Nevertheless, Wiedeking appears to be preparing for his exit. German news agency DPA reported last week that he has hired prominent labor lawyer Jobst-Hubertus Bauer to help him negotiate a severance package, a development also reported by the Financial Times Deutschland newspaper.

Wiedeking has reportedly been a client of Bauer’s for some time now. The labor lawyer has negotiated golden handshakes for several top managers totaling millions in recent years. It is reported that Wiedeking could be up for a deal worth more than €100 million.

Adapted from Spiegel

The on-going feud between the families behind Porsche and VW continues to spill into the business dealings of the two companies. Both Porsche and VW have angled for the better part of four years to be in a position to acquire a controlling interest in the other German automaker. Now Porsche appears to have a backer from the Middle-East willing to fund their next coup attempt.

The management teams of Porsche and Volkswagen will meet in the next two weeks to discuss an investment by the Qatar sovereign wealth fund, with the aim of strengthening Porsche’s bid to takeover Volkswagen. Porsche CEO Wendelin Wiedeking has been pursuing control of VW since 2005 when he first bought a stake in the larger company. That strategy began to fall apart when the global economy evaporated and Porsche, along with much of Wall Street, didn’t have the cash to finance its acquisition of VW.

The dealings between longtime rivals Porsche and VW have been acrimonious to say the least. The VW supervisory board chairman is Ferdinand Piech, the great grandson of Ferdinand Porsche. His family is also part of the controlling stakeholders in Porsche. At one time, it was believed that Piech and Wiedeking were working towards a Porsche move to acquire VW. But in recent months, Piech has been openly critical of Porsche’s moves and its excessive debt.

If he chooses, Piech, as a significant Porsche shareholder, can block the Qatar investment. Qatar is looking for voting shares in Porsche in exchange for investing billions. Up to now, the Porsche and Piech families have controlled all the voting shares.

If the Qatar investment doesn’t go through, the possibility exists that Wiedeking will be removed as CEO and that Porsche will be absorbed by VW.

Adapted from RideLust

Volkswagen says it has indefinitely halted talks over its merger with Porsche, saying the sports car manufacturer is not prepared for a partnership. Porsche went into significant debt earlier this year acquiring a majority share in Volkswagen.

Volkswagen says that Porsche, which wants to align the two automakers together under one umbrella, lacked a sufficient strategy for the potential integration.

“We recognized at the end of the week that Porsche is lacking several fundamental conditions for the discussions”, a VW spokesman said on Sunday.

The automakers had planned to meet today to discuss the merger, but the meeting has been cancelled. Porsche says that the talks will continue, but Volkswagen says it is holding off.

The Porsche-VW tie-up is a family affair; Porsche’s supervisory board is mostly made up of Porsche family members and VW Chairman Ferdinand Piech is a grandson of Porsche founder, Ferdinand Porsche. Yet Piech says that Porsche, the automaker, must reduce its 9 billion euro debt before it seriously considers an integration with VW. Porsche incurred the debt when it scrambled to pick up a controlling share in VW late last year.

Adapted from LeftLaneNews