Volkswagen and Porsche merger, Piech’s revenge?
Porsche’s takeover of Volkswagen is not going very smoothly. What was once established as friendly move to secure the independence of two companies is now redefining the meaning of hostile takeover. Sitting in the middle of this feud is Ferdinand Piech, chairman of Volkswagen’s supervisory board and a major shareholder in Porsche. As far as this merger goes, Piech has earned has seat at the table, but he might be eating two meals.
It started out innocent enough when Porsche announced it was buying a 30 percent stake in Volkswagen last September. Porsche said it did not want to own Volkswagen. Instead Porsche announced it needed to protect its interest in its business ties and own enough stock to prevent another company from taking over VW. This year Porsche has increased its stake in Volkswagen to over 35 percent (with plans to go as high as 50 percent in November) triggering an automatic takeover – what a difference a year makes.
There are many people having troubles with this deal: the unions are scared about Porsche’s past labor tactics; the German state of Lower Saxony, which owns 20 percent of VW, opposes the deal; and Volkswagen’s management is resisting sharing technological information with Porsche. So, with these problems why would Porsche, whose revenues are only about one tenth the size of Volkswagen’s, want to make huge and risky financing deals to obtain Germany’s largest automaker? The silent force behind it all may be the one less investigated: ego.
October 05 2008 11:44 am | Car News
