Volkswagen to Buy Porsche
In a major turnabout and culmination of almost a year of antagonistic infighting, Volkswagen has announced that it will purchase a 42 percent controlling interest in Porsche. The move marks a 180-degree reversal of Porsche's now-derailed plans to acquire the much larger automaker and came as a direct result of problems caused by the massive 10 million Euro debt that was created by its attempt to pull off what amounted to a failed hostile takeover. Under terms of the latest agreement, VW will pay 3.3 billion Euros ($4.7 billion) for its initial stake in Porsche AG (which is a wholly owned subsidiary of Porsche Automobil Holding SE) in a deal to be completed by the end of this year. Ultimately, VW intends to fully integrate the firm into its organization by the end of 2011, where it will join Audi, Bentley, Bugatti, Lamborghini, Seat and Skoda. The acquisition helps move VW further along towards its stated goal of becoming the world's largest automaker, surpassing Toyota and expanding its vast empire that already accounts for nearly 6.4 million vehicle sales annually.
As a result of this corporate restructuring, VW's CEO and Chairman of the Board of Management, Martin Winterkorn, has been named to replace the recently-departed Wendelin Wiedeking as the head of Porsche. However, Porsche will remain headquartered in Zuffenhausen and is expected to continue functioning in a largely autonomous manner with respect to day-to-day operations. As for now, the Porsche and Piech families will continue to be the main shareholders in this new operation and the German State of Lower Saxony will keep its existing 20-percent "golden share" that includes the right to veto any practice it deems detrimental and to name two members to the Board of Management. The new twist here is that Qatar Holding LLC is set to become the third largest stakeholder in this newly combined entity. The Gulf-state-owned financial group has acquired 10 percent of the common shares of Porsche Automobil Holding SE and will gain more leverage as it exercises rights to buy additional VW shares currently held by Porsche SE. In concert with this part of the acquisition, Porsche plans to establish a new R&D and testing center in the city of Doha. While everything is still contingent on final legal approvals by various government and financial entities, this time around, it appears the deal actually is done.