VW And Porsche Squabble Over Pre-Nuptials
VW and Porsche, two of Germany’s most recognisable global brands, just can’t seem to play nice. First there was Porsche’s creeping acquisition of its larger rival last year, which caused hedge fund mayhem and potential litigation. Now the planned merger of the two companies, which would see all the marques including Audi and Skoda come together in harmonious matrimony, hasn’t even got past the pre-nup stage yet.
Talks that were meant to go ahead today have been postponed indefinitely, with this sniffy quote from VW’s spokesman: “Before we can take up talks again, it is necessary that Porsche adopts a clearly constructive attitude toward them”. Ooh, meow! Porsche took on €9bn of debt to fund the shares buyout of VW – now their cars aren’t proving a popular choice in a recession, they look a little precarious, and VW doesn’t want to end up bailing them out by hopping into bed with them.
Last week VW’s Ferdinand Piech said that Porsche must trim its debt before a merger could be considered; he dubbed a figure of €11bn for VW to buy Porsche as “definitely a few billion too high”. Porsche are concerned his remarks have been harming the company; he’s also set to hurt some feelings too, as he’s the grandson of Ferdinand Porsche, the founder of the company. Meanwhile Martin Winterkorn said Porsche needed to be more transparent about their financial status before talks could continue.
Porsche are saying the talks will continue as planned, as its obviously in their interests to have the protection of the bigger company during the recession. But VW obviously has the right to be cheesed off – if Porsche couldn’t afford the VW shares, then why did they heavily leverage themselves to buy them, and draw VW into their financial difficulty? Apart from some kudos and a slick museum, it’s hard to see what Porsche can really bring to the table. But both Porsche and VW are down in this morning’s trading - they’re going to have to sort something out, before a loss of confidence drags them both further downwards.
Posted by Ben Beaumont-Thomas in Hot Money | May 18, 2009 11:35AM |