THIS WEEK IN BRIEF:VOLKSWAGEN WILL have to issue another €4 billion in shares to seal its takeover of Porsche, after it emerged that debts at the luxury car maker were larger than reported.
In its failed bid for VW, the Stuttgart-based sports car company ran up debts of €14 billion – making VW’s takeover of Porsche €4 billion more expensive than reported.
The final takeover is likely to drag on until at least 2011 and will eat up a large chunk of VW’s €11 billion in cash reserves, the company’s buffer against the economic crisis.
That has raised questions among analysts and ratings agencies about just when the enlarged VW concern will begin to feel the deal’s gains – cost savings and joint development.
“Through the Porsche takeover, Volkswagen is losing serious liquidity,” said Prof Stefan Bratzel, auto analyst at the Bergisch Gladbach Technical College. “The combination of the purchase of Porsche and the crisis will really dissolve the reserves of VW.”
Likely to be reduced, too, is the influence of the Porsche family in the merged company. Sources familiar with the details of the deal say the family – the German Porsches and their Austrian cousins, the Piechs – may hold around 30 per cent in the new company – far less than the 49 per cent originally reported, a loss of influence that is likely to be felt when cost-saving talks turn to job cuts.
Auto industry analyst Ferdinand Dudenhöffer predicts the loss of around 20 per cent of jobs at Porsche in coming years as the luxury car company makes the transition from independent firm to one of 10 brands in the VW portfolio.
Keeping a tight eye on costs will be the new arrival on the Porsche board: the Emirate of Qatar, which has reportedly secured a 17 per cent stake in the new company by agreeing to buy VW share options due this month that the Stuttgarters could no longer afford to pay.
The state of Lower Saxony will retain its 20 per cent blocking minority and further details are likely after a VW board meeting on August 13th.
Based on recent figures, the final company will have a turnover of more than €120 billion and sales of 6.4 million vehicles.
Meanwhile, departing Porsche chief executive Wendelin Wiedeking has defended his record and failed four-year epic battle for the VW Goliath. In 1992, he took the top job at a company facing bankruptcy and turned it into the world’s most profitable car firm.
“When I arrived in October 1992, I had many expectations but what I achieved wouldn’t have occurred to me then even in a dream,” he said in an interview, after departing the company last week with a €50 million golden handshake.
“Naturally, I would have wished for a different departure, no question,” he said. “I know that for many adversaries, I was the bogey man, but never for my employees.”