Chad Thomas and Dorothee Tschampa Berlin
VOLKSWAGEN (VW) has agreed to buy the 50.1 percent stake in Porsche’s automotive business that it did not already own for e4.46 billion (R45.5bn), ending a seven-year takeover saga that divided two of Germany’s most powerful families.
VW was able to proceed with the transaction two years earlier than planned after reaching an agreement with German tax authorities, it said late on Wednesday.
The cash deal is based on an equity value of e3.88bn and includes what the Porsche holding firm would have received in dividend payments and half of the forecast synergies from the combination.
VW can now fully fold the Porsche car making business into its stable of 12 brands, which range from Audi luxury cars to Ducati motorbikes.
The purchase helps VW chief executive Martin Winterkorn in his quest to pass Toyota and General Motors and become the largest vehicle manufacturer by 2018.
“It’s very positive for VW as they get 50 percent of an asset they value at e26bn on their own books for e4.46bn,” said Erich Hauser, a Credit Suisse analyst in London. “If I was a Porsche shareholder, I’d feel slightly short-changed.”
VW was up 6.1 percent at e135.80 at 11.51am in Frankfurt, taking gains to 17 percent this year and valuing the German car maker at e60.7bn. The Porsche holding company’s stock declined as much as 1 percent yesterday, giving it a market value of e12.8bn.
The two companies agreed to combine in 2009 after Porsche racked up more than e10bn of debt in an unsuccessful attempt to take over Europe’s largest car maker.
VW said it expected Porsche’s car making business to be fully consolidated in its accounts from August 1.
“Porsche and VW belong together,” Winterkorn said yesterday. “We will raise the company to a new level. We are on the way to being number one.”
Porsche’s earnings contribution for this year would be mainly offset by the purchase price, VW said. By revaluing its existing shares in Porsche, VW expected to book a non-cash gain of more than e9bn and predicted a liquidity drain on its own vehicle production division of about e7bn. The agreement would result in e320 million in additional synergies due to the earlier completion.
VW will pay the purchase price and transfer one share to Porsche, allowing it to classify the merger as a restructuring rather than a takeover.
This will mean VW avoids a possible tax bill of about e1bn. – Bloomberg