Volkswagen halts tie-up talks with Porsche
05-18-09, 07:30 AM
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Volkswagen halts tie-up talks with Porsche
Volkswagen halts tie-up talks with Porsche
Mon May 18, 2009 7:40am EDT
(Reuters) - Volkswagen, Europe's largest carmaker, has halted tie-up talks with Porsche as it said its smaller peer and major shareholder was not ready for a merger.
The two companies had planned to meet on Monday to develop plans for a tie-up after the financial crisis scotched heavily indebted Porsche's plan to raise its stake in VW to 75 percent.
"We recognized at the end of the week that Porsche is lacking several fundamental conditions for the discussions," said a spokesman for VW on Sunday.
Porsche does not have a strategy for a possible integration of the two companies and has to sort out internally where it is headed, VW said.
It is now completely open when the talks will continue, the VW spokesman said.
Porsche declined to comment.
Porsche, which already owns more than half of VW, is fighting for influence in a combination with the world's No. 3 car company and its stable of brands, which range from Bugatti and Lamborghini to the Volkswagen Golf.
Calls mounted meanwhile for VW Chief Executive Martin Winterkorn to lead a possible new group, according to newspaper reports.
The prime minister of the German state of Lower Saxony, which has a blocking minority and holds some 20 percent of VW, supported Winterkorn, German paper Der Tagesspiegel reported, citing a spokesman for the prime minister.
Rupert Stadler, chief of VW's Audi unit, also said in an interview with German magazine Wirtschaftswoche he was in favor of Winterkorn.
Stadler expressed the new balance of power between the two companies by saying that VW was the place for a brand such as Porsche, after Porsche initially had planned to take over VW.
The supervisory board of Porsche will meet on Monday, according to a spokesman for the sports carmaker.
Talking to reporters at a car launch late on Monday, VW Chairman Ferdinand Piech named Winterkorn as his candidate to head a merged group.
He said it was unlikely Porsche boss Wendelin Wiedeking would be happy to stay on in a more "lowly" role. Such comments from Piech, who is also a major shareholder in Porsche, has ended the careers of other managers.
Seeking to find a solution to its financing problems for the VW takeover, Porsche itself had suggested VW might take over its sports car business, a person with knowledge of the matter told Reuters.
At a meeting in Hanover at the end of March, Porsche had asked VW to examine if that was possible, said the person, who declined to be identified.
(Reporting by Peter Dinkloh, Christiaan Hetzner, Hendrik Sackmann and Jan Schwartz; Editing by Ruth Pitchford/Will Waterman)
Mon May 18, 2009 7:40am EDT
(Reuters) - Volkswagen, Europe's largest carmaker, has halted tie-up talks with Porsche as it said its smaller peer and major shareholder was not ready for a merger.
The two companies had planned to meet on Monday to develop plans for a tie-up after the financial crisis scotched heavily indebted Porsche's plan to raise its stake in VW to 75 percent.
"We recognized at the end of the week that Porsche is lacking several fundamental conditions for the discussions," said a spokesman for VW on Sunday.
Porsche does not have a strategy for a possible integration of the two companies and has to sort out internally where it is headed, VW said.
It is now completely open when the talks will continue, the VW spokesman said.
Porsche declined to comment.
Porsche, which already owns more than half of VW, is fighting for influence in a combination with the world's No. 3 car company and its stable of brands, which range from Bugatti and Lamborghini to the Volkswagen Golf.
Calls mounted meanwhile for VW Chief Executive Martin Winterkorn to lead a possible new group, according to newspaper reports.
The prime minister of the German state of Lower Saxony, which has a blocking minority and holds some 20 percent of VW, supported Winterkorn, German paper Der Tagesspiegel reported, citing a spokesman for the prime minister.
Rupert Stadler, chief of VW's Audi unit, also said in an interview with German magazine Wirtschaftswoche he was in favor of Winterkorn.
Stadler expressed the new balance of power between the two companies by saying that VW was the place for a brand such as Porsche, after Porsche initially had planned to take over VW.
The supervisory board of Porsche will meet on Monday, according to a spokesman for the sports carmaker.
Talking to reporters at a car launch late on Monday, VW Chairman Ferdinand Piech named Winterkorn as his candidate to head a merged group.
He said it was unlikely Porsche boss Wendelin Wiedeking would be happy to stay on in a more "lowly" role. Such comments from Piech, who is also a major shareholder in Porsche, has ended the careers of other managers.
Seeking to find a solution to its financing problems for the VW takeover, Porsche itself had suggested VW might take over its sports car business, a person with knowledge of the matter told Reuters.
At a meeting in Hanover at the end of March, Porsche had asked VW to examine if that was possible, said the person, who declined to be identified.
(Reporting by Peter Dinkloh, Christiaan Hetzner, Hendrik Sackmann and Jan Schwartz; Editing by Ruth Pitchford/Will Waterman)
05-18-09, 08:35 PM
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Originally Posted by AP
WEISSACH, Germany (AP) — Volkswagen's CEO said the company "will not be pushed" to hurry talks over a possible merger with majority shareholder Porsche AG.
In a letter to VW employees obtained Monday by The Associated Press, VW head Martin Winterkorn said more analysis was needed to avoid risking Volkswagen's finances in any combination with sports car maker Porsche, now facing deep debts.
Volkswagen on Sunday announced that it was postponing talks over the combination, agreed to last week by the two companies. Porsche insisted, however, that only one meeting had been canceled and the deal talks were ongoing.
"For any association between Volkswagen and Porsche, we have to systematically analyze the position of Porsche in order to get a clear picture of the real situation," Winterkorn said in the letter.
"We need full transparency of the current situation. It is in the interest of all involved, our workers, shareholders and customers, that we do not risk Volkswagen's financial stability and sovereignty."
"For that reason, we will not be pushed to rushed negotiations by anyone ...we need a constructive atmosphere for the necessary constructive talks. That has not been the case lately. We are not under pressure. All the options and circumstances have to be thoroughly investigated, in order to be able to decide on the basis of facts," the letter read.
Porsche built a 51 percent stake in Volkswagen, and appeared to be in the driver's seat, but ran up debt as it did so. As auto markets turned down and credit tightened, Porsche moved instead to merge operations with Volkswagen and forge an integrated company in which Porsche's sports-car operations would be one of the brands.
Porsche employee representatives walked off the job Monday in protest at the proposed combination at the company's development center in Weissach near Stuttgart. Porsche's employee council chief Uwe Hueck demanded that the independence of Porsche continue.
"Porsche stays Porsche. VW stays VW. That's the message," Hueck said.
Nearby, Porsche's supervisory board — much like a U.S. board of directors — convened but without leader Ferdinand Piech, also VW's board chairman, whose absence was not expected or explained. Other board members, including those from the Porsche family — controlling shareholders of Porsche Automobil Holding SE — were to discuss the integration plan, agreed to earlier this month, with particular focus on Porsche's debts.
At the heart of the dispute is some euro9 billion ($12.22 billion) in net debt that Porsche — at the time Germany's most successful car maker — racked up in its attempt last year to take over the much larger VW.
Piech, a grandson of company founder Ferdinand Porsche, angered Porsche by openly discussing the debt with reporters last week.
VW also has accused Porsche of withholding information regarding the true size of its debts and what it expects to see happen if the two companies merge, amid speculation that Porsche is seeking some euro4 to euro5 million ($5.4 to $6.7 million) in fresh capital.
In a letter to VW employees obtained Monday by The Associated Press, VW head Martin Winterkorn said more analysis was needed to avoid risking Volkswagen's finances in any combination with sports car maker Porsche, now facing deep debts.
Volkswagen on Sunday announced that it was postponing talks over the combination, agreed to last week by the two companies. Porsche insisted, however, that only one meeting had been canceled and the deal talks were ongoing.
"For any association between Volkswagen and Porsche, we have to systematically analyze the position of Porsche in order to get a clear picture of the real situation," Winterkorn said in the letter.
"We need full transparency of the current situation. It is in the interest of all involved, our workers, shareholders and customers, that we do not risk Volkswagen's financial stability and sovereignty."
"For that reason, we will not be pushed to rushed negotiations by anyone ...we need a constructive atmosphere for the necessary constructive talks. That has not been the case lately. We are not under pressure. All the options and circumstances have to be thoroughly investigated, in order to be able to decide on the basis of facts," the letter read.
Porsche built a 51 percent stake in Volkswagen, and appeared to be in the driver's seat, but ran up debt as it did so. As auto markets turned down and credit tightened, Porsche moved instead to merge operations with Volkswagen and forge an integrated company in which Porsche's sports-car operations would be one of the brands.
Porsche employee representatives walked off the job Monday in protest at the proposed combination at the company's development center in Weissach near Stuttgart. Porsche's employee council chief Uwe Hueck demanded that the independence of Porsche continue.
"Porsche stays Porsche. VW stays VW. That's the message," Hueck said.
Nearby, Porsche's supervisory board — much like a U.S. board of directors — convened but without leader Ferdinand Piech, also VW's board chairman, whose absence was not expected or explained. Other board members, including those from the Porsche family — controlling shareholders of Porsche Automobil Holding SE — were to discuss the integration plan, agreed to earlier this month, with particular focus on Porsche's debts.
At the heart of the dispute is some euro9 billion ($12.22 billion) in net debt that Porsche — at the time Germany's most successful car maker — racked up in its attempt last year to take over the much larger VW.
Piech, a grandson of company founder Ferdinand Porsche, angered Porsche by openly discussing the debt with reporters last week.
VW also has accused Porsche of withholding information regarding the true size of its debts and what it expects to see happen if the two companies merge, amid speculation that Porsche is seeking some euro4 to euro5 million ($5.4 to $6.7 million) in fresh capital.
So Mr. Piech (Chairman Volkswagen Supervisory board) didn't show up to the latest Supervisory board meeting, another snub to Mr. Wiedeking (Porsche head). My guess is other than the huge debt, Mr. Wiedeking would like to apply some of his "efficiency" methods learned from Toyota to the VW Group in a merged operation, angering both Piech and top head Winterkorn (VW head) given that for the duo, profits have always come second to "building the best in class products".
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