VW #1 Carmaker?

Volkswagen, the 49.9% owners of Porsche, has announced that on August 1st, they will pay £3.65 billion for the remaining 50.1%.

As Volkswagen will now make around 40% of the global luxury car market, it is a move which furthers the Germany company’s claim to be the most influential and important car manufacturer on the planet.

Volkswagen, who sold 8.3 million vehicles in 2011, add Porsche to a group that already includes Bugatti, Bentley, Audi, Skoda, Seat, Lamborghini and Scania.

The move ends a fascinating game of cat and mouse between the companies: Porsche has been eyeing a takeover of their German rivals for much of the last decade.

In 2009 Porsche failed in a bid to acquire a 75% stake in Volkswagen, the global financial crisis made it impossible to raise enough money.

In the process of attempting to raise those funds, Porsche accumulated sizeable debt and was sued by investors amid accusations of deception. Later in 2009, Volkswagen bought 49.9% of a weakened Porsche. Previously, the two firms had agreed to join forces, though tax implications prohibited that merger.

Common Share

Under the terms of the August 1st deal, Volkswagen have added a single ‘common share’ to the £3.65 billion purchase, a move which avoids more than one billion euros in tax.

Under a common share, in the unlikely event of Volkswagen’s bankruptcy, Porsche would receive remaining funds (after bondholders, creditors and preferred stock holders are paid). Such investors usually receive nothing, making the share largely notional. However, a common share can also offer voting rights to the holder, a right which could be pivotal when it comes to Porsche design over upcoming years.

“The accelerated integration will allow us to start implementing a joint strategy for Porsche’s automotive business more quickly and to realise key joint projects more rapidly,”

said Hans Dieter Poetsch, chief financial officer of Volkswagen.

World’s Top 10 Car Manufacturers Companies in April 2012

  1. Toyota Motor Corporation (Japan)
  2. General Motors Company (Detroit, United States)
  3. Volkswagen Group AG (Wolfsburg, Germany)
  4. Hyundai Kia Automotive Group (Seoul, South Korea)
  5. Ford Motor Company (Dearborn, United States)
  6. Nissan (Yokohama, Japan)
  7. Honda Motor Company (Tokyo, Japan)
  8. PSA Peugeot Citroën S.A. (Paris, France)
  9. Suzuki Motor Corporation (Shizuoka, Japan)
  10. Renault (Boulogne-Billancourt, France)

About Author