Porsche to merge with Volkswagwn

antodeco

Luxury sports car maker Porsche said this evening it would merge with its fellow German car firm Volkswagen, more than three years after first making a takeover bid for it.

A joint task force of both companies would work on setting up a merged entity, Porsche said in a statement released after a meeting of managers from the two firms and Porsche's owners in Salzburg, Austria. The merged group would have ten separate car brands under one management, it said.

Stuttgart-based Porsche already holds a majority stake in Volkswagen and made an audacious takeover bid for it three and a half years ago. Press reports had said last week that VW was considering a counter bid for Porsche.

VW is by far the bigger company, with the biggest sales of any car firm in Europe - 15 times larger than its smaller German peer, which is €9 billion in debt.

The Porsche parent group owns a little more than 50% of VW after having boosted its stake in January, and had aimed to raise its stake to 75%.

The German state of Lower Saxony, which has a one-fifth stake in Volkswagen, will take part in the task force as well as employees' representatives, the statement said.

Taken from http://www.rte.ie/business/2009/0506/porsche.html

Porsche €9 Billion in debt, but can still buy out Volkswagen.

Frank_Gooding

Saw an interesting prgram on this not so long ago about how it has been on the way for a long and a lot of investers for nailed to the wall on something like share options.

mickdw

I dont know anything about stock market but it went something like this.

Under german law there was no requirement to disclose the amount of shares they (porsche) owned in vw so they gradually grew the share to about 50%. At the same time, shae prices were dropping across the board but vw prices were staying strong due to porsche steadily buying them up.
Now the Cute hedge fund guys felt sure that vw prices would have to drop soon in line with other shares as there was no logical reason for the prices (they didnt know porsche were buying everything) so they bet heavy on a price drop using some stock market system of basically borrowing shares at the high price, buying them at the low price and then pocketing the difference.
It then emerged that porsche were buying up everything and the hedgefund guys knew they were screwed. They then had to get their hands on shares to return the borrowed ones but the problem was there were limited numbers available. This started a bidding war which drove the shares crazy. Porsche could have made probably 50 times their investment if they then sold but they only sold a portion I think.
The result of all this is that Porsche was the first company ever to make more profit that actual business turnover and the car business amounted to only a tiny part of the company profit.