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Automotive Industry
AUTOS: VW Finalizes Porsche Takeover
The $5.6 billion deal brings the performance sports-car and SUV maker into VW’s growing stable of European automotive brands.
Volkswagen says it will allow Porsche to operate independently and maintain its own identity. (Photo: Porsche)
Volkswagen Group’s complex deal to take over Porsche has been finalized, with VW now controlling 100 percent of the shares of the sports-car company.
The total cost of the deal, first announced in early July, was 4.46 billion euros (approximately $5.6 billion), which included about €3.88 billion ($4.75 billion) for the remaining 50.1 percent stake and the rest going to cover some adjustment items.
With the finalized agreement, Volkswagen can fold Porsche into its collection of European brands, which include Audi, Bentley, Bugatti, Lamborghini, Seat, Skoda and Ducati motorcycles.
Though Volkswagen has been closely linked with Porsche since the company’s founding more than 60 years ago, the complete integration of the two companies now means that they will be able to implement joint strategy. Porsche will still be run independently, VW says, in line with Volkswagen’s decentralized management structure.
“Porsche will retain its own identity and operational independence, just like all of the other group brands," Volkswagen Group CEO Martin Winterkorn said in an official statement.
This ends a five-year ordeal that saw the holding company Porsche SE attempt to take control of the entire Volkswagen Group. In the early part of 2007, Porsche SE started increasing its ownership in Volkswagen, and by 2009 Porsche SE’s stake in Volkswagen had increased to 50.76 percent and a takeover was looming.
But German state laws and Porsche SE’s own mounting debts (which it used to finance the original purchase of the Volkswagen shares) ultimately forced it to turn to Volkswagen for help, leading to Volkswagen’s turnabout purchase of Porsche stock.
The failed takeover attempt not only cost then Porsche CEO Wendelin Wiedeking his job, it cost investors billions. At one point, Volkswagen’s share price was trading at more than $1,250, making it the world’s most valuable company at the time, but the price dropped the next day due to negative reaction to the failed takeover.
This story originally appeared at Motor Authority.
The total cost of the deal, first announced in early July, was 4.46 billion euros (approximately $5.6 billion), which included about €3.88 billion ($4.75 billion) for the remaining 50.1 percent stake and the rest going to cover some adjustment items.
With the finalized agreement, Volkswagen can fold Porsche into its collection of European brands, which include Audi, Bentley, Bugatti, Lamborghini, Seat, Skoda and Ducati motorcycles.
Though Volkswagen has been closely linked with Porsche since the company’s founding more than 60 years ago, the complete integration of the two companies now means that they will be able to implement joint strategy. Porsche will still be run independently, VW says, in line with Volkswagen’s decentralized management structure.
“Porsche will retain its own identity and operational independence, just like all of the other group brands," Volkswagen Group CEO Martin Winterkorn said in an official statement.
This ends a five-year ordeal that saw the holding company Porsche SE attempt to take control of the entire Volkswagen Group. In the early part of 2007, Porsche SE started increasing its ownership in Volkswagen, and by 2009 Porsche SE’s stake in Volkswagen had increased to 50.76 percent and a takeover was looming.
But German state laws and Porsche SE’s own mounting debts (which it used to finance the original purchase of the Volkswagen shares) ultimately forced it to turn to Volkswagen for help, leading to Volkswagen’s turnabout purchase of Porsche stock.
The failed takeover attempt not only cost then Porsche CEO Wendelin Wiedeking his job, it cost investors billions. At one point, Volkswagen’s share price was trading at more than $1,250, making it the world’s most valuable company at the time, but the price dropped the next day due to negative reaction to the failed takeover.
This story originally appeared at Motor Authority.
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