Intrigue, German-Style, in Ongoing Porsche-VW Tussle
September 19, 2008
By Bill Visnic
Take volatile and imperious-but-brilliant exec Ferdinand
Piech. Add a dash of labor-union maneuvering. Spice comes from high-line maker Porsche. Throw into the pot that is Germany's largest automaker, VW.
The resulting stew is on the boil in another late-summer German industrial power play.
Porsche AG has for months been unfolding its complicated, flea-eats-elephant play for majority ownership of Volkswagen AG that began several years ago when Porsche initiated a run to increase its 18.1-percent stake in VW. To now, it had largely been the stuff that could be loved only by those who delight in deciphering high-level corporate politics.
But earlier this week, it became official: Porsche now owns a majority voting stake, at least, in VW: it ratcheted its interest to 35.14 percent of VW's ordinary shares. This makes Porsche the largest single holder of voting rights - and gives the niche sports-car maker what amounts to control of giant VW.
It gets better: Wendelin Wiedeking, Porsche CEO, reiterated that Porsche intends to drive
on to obtain more than 50 percent of VW shares. Just so there's no doubt about who's the boss, it seems.
Problem is, in recent weeks rumors in the German press have heated with the suggestion Wiedeking is being targeted for ouster by the coalition of VW CEO Martin Winterkorn and Germany's formidable labor unions, which themselves hold several seats on VW's important supervisory board.
The unions and Winterkorn presumably would prefer if Porsche kept its hands off - at least in large part to assure the autonomy and market position of VW's Audi luxury arm, which many fear will be marginalized and compromised in a VW now under Porsche control, as Porsche and Audi could be judged as direct competitors in many segments. Porsche's sensitivities in this area likely were heightened by Audi's recent launch of the mid-engine R8 sports car, which has been judged by many to be superior to Porsche's renowned 911.
The final taste of controversy adds family intrigue. German press reports also claim Porsche
chairman Wolfgang Porsche is mounting an effort to remove cousin Ferdinand Piech from his role of chairman of VW's supervisory board. In a claim that seems to relate to mounting tensions regarding Porsche's takeover of VW, Wolfgang Porsche was quoted as saying, "I am appalled with the voting behavior of the supervisory board chairman."
Industry watchers continue in an attempt to translate exactly what that statement means to the overall situation. But along with the Porsche family, Piech's family also owns a stake of Porsche - the company which is executing what amounts to a hostile takeover of the company Piech ostensibly oversees.
Apart from Wolfgang Porsche, Piech in fact is the second-largest stakeholder in Porsche - and Wolfgang's ire at Piech apparently stems from Piech's missing a recent board meeting in which his vote might have helped restrict Porsche's "cooperation" in Audi's operations. By doing so, Piech ostensibly was currying favor with VW's labor unions, which see Porsche control of the company as undercutting their influence in VW.
The positioning also puts Piech at odds with Porsche CEO Wiedeking, despite the fact Piech was long a supporter of the now-acquisitive Porsche chief.
A convoluted puzzle if ever there was one. Here's the scorecard:
• It's VW supervisory board chairman Piech and VW CEO Martin Winterkorn - along with the VW labor unions - against Ferdinand Porsche and Porsche CEO Wiedeking.
• Wolfgang Porsche wants Piech's wings clipped at VW. Volkswagen's Winterkorn wants Wiedeking fired at Porsche.
• And just about everybody at VW wants Porsche's mitts off Audi.
But with Porsche now owning voting control of VW and charging for a true majority stake, VW's boardroom options already may be limited. Yesterday, in fact, Reuters reported VW now is attempting to place barriers between it and Porsche in the form of VW employee-conduct rules that require Porsche to be treated as an outside party in terms of access to certain types of information.
Photos
1 & 2 - Porsche 911 (left) and Audi R8 (right) may be too close for comfort in a combined product line.
3 - Wendelin Wiedeking
4 - Ferdinand Piech
5 - Martin Winterkorn
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