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Porsche and VW to clash over rescue plan
By Daniel Schäfer in Frankfurt
Published: May 4 2009 23:27 | Last updated: May 4 2009 23:27
The feuding families that control Porsche are set for a showdown on Tuesday when they will argue over rival rescue strategies for the highly-indebted German sports carmaker.
Wolfgang Porsche, chairman of the eponymous carmaker, and Ferdinand Piëch, chairman at Volkswagen, laid bare a deep family schism last week when they clashed over how to bail-out debt-ridden Porsche.
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In depth: Autos - Feb-26Interactive: Global automotive bail-outs - Feb-18Lex: German carmakers - May-03Mr Porsche, whose family branch owns a larger portion of Porsche than the Piëch clan, is backing a plan by Wendelin Wiedeking, the carmaker’s chief executive.
Mr Wiedeking wants to merge VW and Porsche into a new holding company and to inject capital from the families – perhaps through their Austrian car distribution business – and outside investors too.
People close to the situation said several sovereign wealth investors from the Middle East, one believed to be from Qatar, had expressed interest in investing in a combined VW/Porsche group.
But that plan comes after the FT revealed two weeks ago that Mr Piëch has an alternative proposal for VW to take over Porsche AG, the automotive business that is owned by the highly-indebted holding company Porsche SE.
That move, which would turn upside down Porsche’s takeover of VW that started in 2005, was rebuffed by Mr Porsche when he said in a German newspaper interview that “we are currently on the right path. Porsche AG will not be sold to Volkswagen”.
People close to Mr Piëch said Mr Porsche had soured the atmosphere ahead of this week’s family meeting in Salzburg: “This makes it much harder to agree to a solution.”
Mr Piëch aims to replace Mr Wiedeking and Holger Härter, chief financial officer – who are both close to Mr Porsche – with VW executives, should the takeover of Porsche be successful.
The feuding Porsche and Piëch families are constrained by a family contract that demands unity on any issue to be decided by Porsche’s supervisory board.
Porsche is struggling under a €9bn net debt load from its takeover of VW, Europe’s largest carmaker. It could run into difficulties servicing its interest payments at a time when cash flow from making cars is dwindling.
Porsche has used a contentious options strategy, spending about €23bn to gain control of a 51 per cent stake in Volkswagen.
Mr Piëch has repeatedly sided with VW’s powerful works council to scupper the ambitions of Mr Porsche and Mr Wiedeking to control VW.
