Industry: Volkswagen takes 49.9 percent stake in Porsche AG
Written by: Michael W. Rush
Post Tags: industry > PORSCHE > vw
With the holliday season just around the corner, the automotive news are becoming less frequent. And especially the big ones, like this one we have here for you today. Many of you will remember the old beetle and the way that Porsche came to the supercar market in the last century, and with 60 years that have passed since then, some big things are happening to them regarding the ownership. While some may not like the idea, that Porsche will be owned by Volkswagen (or own a big piece of the company that is here), some may like this information. If not for anything else, it is well known that VW turns to gold everything it touches almost. We shall wait and see what will happen, and we will adress this in our weekly column soon.
Volkswagen Aktiengesellschaft has today taken a 49.9 percent stake in Porsche AG. The next important step on the way towards the integrated automotive group with Porsche has therefore been completed, as announced, before the end of the year. The price for the stake is €3.9 billion and is based on the enterprise value for Porsche AG calculated under a careful due diligence and valuation procedure.
Following the Comprehensive Agreement concluded in August, the implementation agreements signed in November and the Volkswagen Extraordinary General Meeting held last week, the stake in Porsche AG represents the next milestone on the way towards the integrated automotive group with Porsche under the leadership of Volkswagen. The acquisition of the trading business of Porsche Holding Salzburg is planned for 2011. The creation of the integrated automotive group is then to conclude with the merger of Volkswagen AG and Porsche SE during the course of the same year.
The combination of the two companies follows a compelling strategic, industrial and financial logic. For the Volkswagen Group, Porsche ideally complements the brand portfolio. The Stuttgart-based car maker will allow Volkswagen to further expand its position in the premium business, which offers particularly strong earnings. In turn, as an independent brand under the roof of the Volkswagen Group, Porsche will have the potential for significant additional growth.
The transaction will have a sustained positive effect on the earnings situation of the Volkswagen Group. With a return on sales of 10.3 percent, Porsche AG is the world’s most profitable automobile manufacturer. Volkswagen will in future participate in this business success through its stake. In addition, the planned integration of Porsche in the Volkswagen Group and the associated closer cooperation will realize significant synergies on both the income and the cost side. As a result, the annual operating profit of the Volkswagen Group is expected to increase by some €700 million in the long term.
Source: Volkswagen Press Release
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Well I don’t have a real idea what will this bring us in the future so we will have to wait, to see whether this will be good or bad for both car makers now.
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