Life & Style | Motoring
Qatar takes key VW-Porsche stake
Porsche is to sell a 10 per cent voting stake to Qatar Holding LLC as a way to prop up its strained finances, marking a climbdown for a predator that had once sought to dominate Volkswagen.
- Reuters
- Published: 22:53 August 14, 2009
- Porsche had sought to seize control over Volkswagen as a way to gain access to key components and technologies.
- Image Credit: AP
Frankfurt: Porsche is to sell a 10 per cent voting stake to Qatar Holding LLC as a way to prop up its strained finances, marking a climbdown for a predator that had once sought to dominate Volkswagen.
Qatar Prime Minister Shaikh Hamad Bin Jasem Bin Jaber Al Thani signed the agreement just 24 hours after VW sealed a deal with the iconic German sports carmaker Porsche to merge the two auto manufacturers.
Porsche is selling a 42 per cent stake in Porsche AG for about 3.3 billion euros ($4.7 billion) and also sold a package of cash-settled options on VW shares to Qatar which the company said would free up 1 billion euros in cash for Porsche.
The derivatives deal will give Qatar access to a 17 per cent stake in Volkswagen, Europe's biggest car maker, a person familiar with the deal said.
Volkswagen said it would add the Porsche marque as a 10th brand to its stable that already includes Audi, Bugatti, Bentley, Lamborghini, Skoda, Seat and Scania.
"The journey has been anything but easy. Up until the last couple of days there have been tough and sometimes emotional disagreements. But that time is now behind us," said Volkswagen Chief Executive Martin Winterkorn, who was also named Porsche CEO late on Thursday.
VW's ordinary shares fell 15.6 per cent to close at 190.70 euros, having dropped as low as 165.00 euros during the day. Porsche shares rose 8.7 per cent to close at 48.50 euros.
Porsche's capitulation comes after a failed attempt to take over VW and at the end of a prolonged power struggle that claimed the scalp of Porsche Chief Executive Wendelin Wiedeking.
Porsche had sought to seize control over Volkswagen as a way to gain access to key components and technologies it needs to meet stringent new pollution rules.
But Porsche's takeover attempt backfired after it took on more than 10 billion euros in debt while buying a 50 per cent VW stake and a package of derivatives for control over an additional 20 per cent of VW stock.
It was forced to seek help from Volkswagen, which already supplies components for about a third of all Porsche cars, including bodies of the four-door Cayenne and Panamera models.
In a further step to alleviate Porsche SE's debt, Porsche's controlling families -- the Piech and Porsche clans -- will sell their automobile trading business, Europe's largest, to VW.
The business, with an enterprise value of 3.55 billion euros, will be sold by 2011, Volkswagen said.
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