"Window Closing" on VW-Porsche Tie-Up
June 29, 2009
First, tiny sports-carmaker Porsche SE ran a gambit to gain control of the world's second-largest automaker, Volkswagen Group.
Various industry and political pressures and the global economic crisis got in the way, though, and VW now is turning the tables as Porsche bows under the towering debt it ran up during nearly four years of acquiring VW stock.
Reuters reported from Europe today that Porsche rejected VW's latest offer to buy the sports-carmaker and continues to resist pressure from Germany's state of Lower Saxony -- formerly VW's largest stakeholder -- for the two companies to combine.
Although Porsche currently owns 51 percent of Volkswagen, giant VW now proposes buying Porsche's carmaking operations and essentially running Porsche as another of the VW Group's nine brands, which include Audi, Lamborghini and Skoda. German publications said VW had offered between 3 billion and 4 billion euros to acquire 49.9 percent of Porsche.
But Porsche last week called the deal "blackmail." Further complicating the matter, Porsche says any sale of all or part of the sports-carmaker requires the immediate repayment of a Porsche credit line totaling some $15 billion.
Analysts in Europe now are saying Porsche may have little choice but to accept some kind of acquisition or merger with VW -- Porsche's debt far exceeds its current market value.
Although the two often bitterly feuding companies said last month they were once again examining some type of merger, Porsche seemingly was exploring other options, reportedly talking with Middle East interests, including Qatar and Abu Dhabi, about selling interest in the company.
Lower Saxony is pressing for a quick merger of the two companies but a spokesman said the "window is slowly closing" for a deal. Lower Saxony benefits from an often-discussed German law that allows it to block major strategic decisions at VW, despite the fact its 20 percent ownership of VW makes it only the second-largest owner after Porsche.
Posted by Bill Visnic at 9:42 AM under Business , Companies , News | Comments (0) | digg this | Seed Newsvine
Leave a comment