Discussion Starter · #1 ·
Porsche SE said Monday that its board has given the sports car manufacturer clearance to raise its stake in Volkswagen AG to more than 50 percent, a move that allows Porsche to take control over Europe's largest carmaker.
"Our aim is to create one of the strongest and most innovative automobile alliances in the world, which is able to measure up to the increased international competition," Porsche Chief Executive Officer Wendelin Wiedeking said in a statement.
The two companies have longstanding historical and family ties. Ferdinand Porsche designed the original Beetle, and his grandson, Ferdinand Piech, an investor in Porsche, is the supervisory board chairman and former CEO of Wolfsburg, Germany-based Volkswagen.
Porsche, which makes the legendary 911 sports car, said it has no plans to merge the two carmakers, but analysts said both companies would benefit by pooling their growing research and development expenses.
Porsche additionally would benefit by combining its high-performance cars with VW's more fuel-efficient vehicles to get a better environmental score. Porsche's carbon dioxide emissions are currently more than twice as high as the strict levels proposed by the European Commission.
Stuttgart, Germany-based Porsche already is the biggest shareholder in Volkswagen, with a 31 percent stake.
The sports car maker, controlled by the Porsche and Piech families, made a low-ball bid last year for all of Volkswagen, which few shareholders accepted, which means Porsche can now raise its stake without having to make a bid offer to all shareholders. Analysts speculated last week that Porsche was preparing to raise its stake in VW after the sports car specialist confirmed that it would draw a $15 billion credit line.
"The supervisory body authorized the managing board to initiate all steps needed under regulatory and antitrust laws throughout the world" to increase the holding, Porsche said in Monday's statement.
But such a deal is likely to face strong opposition. Politicians and labor leaders have criticized Porsche's moves on VW, whose management has maintained close ties with labor representatives through innovative measures but also through questionable means, including bribery. Prosecutors have pursued several top VW officials recently for corruption and bribery.
German media have speculated about power struggles among the high-level Porsche and VW executives, with some reports suggesting that Ferdinand Piech was gunning for Wiedeking, a talented and confident manager. Porsche said Monday that Piech, 70, had stepped down from the Porsche supervisory board's executive committee and would be replaced by family member Hans Michel Piech, 66.
Last year, Volkswagen's earnings rose 50 percent to $6.2 billion, helped by an 8 percent rise in sales to 6.2 million. In September, Porsche reported that it sold 97,515 units in its fiscal 2007, up less than one percent from a year earlier. The firm said net income for the year ended July 31 was $6.17 billion.