labels: M&A, Cars
Qatar's interest in Porsche sparks speculation news
29 April 2009

German luxury car maker Porsche has long been trying to buy Volkswagen in which it already holds a 51-per cent stake. But with reports that the oil and gas rich Arab state Qatar is in talks to buy a stake in debt-laden Porsche, analysts believe it could be more feasible for Volkswagen to buy some of Porsche assets.

Al-Arab newspaper reported on Tuesday that prime minister Sheikh Hamad bin Jassem al-Thani was seriously considering taking a stake in the luxury sports car manufacturer.

This is not the first instance of an Arab state keen on acquiring a stake in a German automaker. Last month, Aabar Investment PJSC, said it would pay nearly 2 billion euros for a 9.1-per cent stake in German automaker Daimler, maker of the Mercedes-Benz. Aabar Investment is an investment vehicle set up by the oil rich United Arab Emirates sheikdom.

But according to analysts, the Porsche family is not interested in divesting its voting power and would continue to keep the 100-per cent share-voting power in the company. They say if the family needed to refinance much of its 9 billion-euro debt in the short term, it would rather sell assets to Volkswagen that to issue new capital.

According to German law, if the Porsche family offered new shares in the market, it would have to make available the same number of preference shares and ordinary shares which grant voting rights to buyers.

Analysts point out that the family does not want to give out voting rights and even in the '80s when one of them wanted to sell a stake to another investor, the family bought them back to avoid having to part with voting rights.

The Porsche family need not sell the stake it already owns in Volkswagen though, as it can sell its other business, Porsche Holding to Volkswagen, the part that is bogged down by the debt. The part can fetch it around 8 billion euros and it would take care of Porsche's debt problems.

Porsche shares fell 4.9 per cent or 2.62 euros to 51.78 euros in afternoon trading in Frankfurt.

Qatari officials have remained tight lipped about the proposed deal including the size of the proposed stake or what they hope to gain from it.

Analysts point out that Porsche is an efficient company that is likely to weather the downturn much better than its US competitors and holds value for the long-term investor.

In the short term though, gulf investors will not be able to make money from their investments. Daimler announced a first-quarter loss of $1.7 billion on Monday; it had announced a fourth quarter loss of $1.9 billion in the fourth quarter of last year.

This is the first time the company has lost money in two consecutive quarters.

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Qatar's interest in Porsche sparks speculation