The arm wrestling between German automaker Volkswagen Group (VW) and sports car maker Porsche SE appeared to have come to an end on Saturday.
After much back and forth, Volkswagen appears to have the upper hand as German magazine Der Speigel reported over the weekend that Porsche’s controlling family is accepting an offer from VW to buy Porsche’s sports car business for roughly 8 billion euros ($11.3 billion).
The magazine said that the rival Porsche and Piech families, which control Porsche, agreed to a 49.9 percent takeover by VW. The company would acquire the rest of Porsche at a later date.
If true, the takeover likely means an exit for Porsche’s embattled CEO Wendelin Wiedeking, who has led the group for 16 years and attempted a hostile takeover of the much larger VW last year. Porsche had used an exotic financing plan at the time and it backfired as a result of the 2008 credit crunch.
The failed takeover attempt saddled Porsche with more than $10 billion in debt, according to Reuters estimates.
Family Feud
Porsche owns a 51 percent stake in VW as of January 2009, and the two companies share a significant amount of research work, collaborative engineering, and parts.
Wiedeking last month sought to secure a $7 billion cash infusion from the government of Qatar to facilitate a takeover of VW. However, the move was rejected by Porsche’s biggest shareholder, Ferdinand Piech, who ironically, is the chairman of VW’s supervisory board. Piech had opposed the investment. Piech is the grandson of Ferdinand Porsche, the legendary Austrian engineer who created the Beetle and many Porsche sports cars.
The sale to VW would enable Porsche to pay off most of its debt owed.
VW is a major player in the German automobile market, and began during the second world war to build vehicles for the Nazi government. Its world famous Beetle model became an icon and spurred a re-launch in the 1990s. In addition to its Volkswagen nameplate, VW also owns Audi, Bentley Motors, Spain’s SEAT, and Scania AB, a Swedish manufacturer of heavy trucks.
Experts are betting that Wiedeking —the highest-paid CEO in Europe with an annual pay package in excess of 80 million euros ($113 million) —will pick up a severance package of at least 100 million euros ($141 million). If successful, Wiedeking’s golden parachute would need to pay out the rest of his contract, which runs through 2012, as well as a bonus and pension rights.
