Volkswagen to own Porsche's automobile business by 1 Aug
06 July 2012
German carmaker Volkswagen Aktiengesellschaft (Volkswagen) has announced the complete integration of Porsche Automobil Holding SE (Porsche) into the group by 1 1 August 2012.
According to the deal, Porsche will sell its holding business operations, including its 50.1-per cent investment in Porsche's operating business, to Volkswagen.
After the completion of the transaction, Volkswagen will become the sole owner of Porsche's automotive business.
Porsche will, however, continue to hold a 32.2-per cent share of Volkswagen's capital and will therefore participate indirectly in the result of Porsche's operating business as well as benefiting from the realisation of the full synergy potential of the Integrated Automotive Group in the future.
In March 2011, Volkswagen had acquired Porsche Holding Salzburg (PHS), the automobile trading business of Porsche for €3.3 billion (See: Volkswagen acquires Porsche Holding Salzburg for $4.56 billion).
''The accelerated implementation of the shared goal will make Porsche a financially strong holding company with attractive potential for increasing value added,'' said Matthias Müller, member of the Porsche executive board.
''In their operating business, Porsche and Volkswagen will now be able to leverage synergies at an earlier stage and cooperate more easily,'' he added.
Porsche will receive a cash amount of about €4.46 billion from the transaction, as well as one new ordinary Volkswagen share.
This cash amount includes the base purchase price agreed upon in the basic agreement and discounted to today's fair value for Porsche's 50.1 per cent share in Porsche's operating business. Porsche will initially use the cash that it receives to repay bank liabilities of €2 billion in full.
The major portion of the liquidity remaining thereafter is intended to be used for strategic equity investments, focusing along the automotive value chain.
The accelerated creation of the Integrated Automotive Group can be implemented at economically viable conditions on the basis of regulatory rulings.
''The unique Porsche brand will now become an integral part of the Volkswagen Group. That is good for Volkswagen, good for Porsche and good for Germany as an industrial location'', said Prof. Dr. Martin Winterkorn, chairman of the board of management of Volkswagen.
The two companies announced last September that it would not be possible to implement the merger of Volkswagen AG and Porsche SE provided for in the Comprehensive Agreement signed in 2009 by the end of 2011, as had been agreed.
In addition, the tax treatment of the put/call options provided for in the Comprehensive Agreement does not allow the automotive business to be integrated on economically feasible terms before the second half of 2014. The two companies have therefore been exploring alternative ways of achieving their common goal of an integrated automotive group that can be implemented by all parties at an earlier point in time.
Under the structure developed jointly by the two companies, Porsche SE will contribute its operations as a holding company, including its 50.1-per cent Porsche stake, to Volkswagen, which already holds indirectly 49.9 per cent of Porsche (Volkswagen lifts initial Porsche stake to 49.9 per cent).
According to experts, the consolidation of Porsche's highly profitable automotive business will have a positive impact on Volkswagen's consolidated profit.
The downturn and negative sentiments in the market proved to be no hurdles for the German carmaker as it raced to close the year clocking 140 per cent growth, selling 78,408 units in the calendar year 2011 as against 32,627 units sold in the same period last year (See: Volkswagen clocks 140 per cent sales growth)
The Volkswagen Group is globally represented by nine brands - Audi, Bentley, Bugatti, Lamborghini, Scania, Seat, Skoda, Volkswagen Commercial Vehicles (Volkswagen Nutzfahrzeuge) and Volkswagen passenger cars. Its product range extends from low-consumption small cars to luxury class vehicles and trucks.
The group operates 60 production plants around the world, employs more than 370,000 and manufactures or services over 26,600 vehicles each working day.
With its Indian headquarters in Pune, Maharashtra, the Volkswagen group is represented by three brands in India - Volkswagen, Audi and Skoda.