July 24, 2009
As the Engine Turns – VW/Porsche Saga Nears End
Over at post-bankruptcy GM and Chrysler decisions are now
being weighed studiously on whether or not shedding this division or that brand
contributes to the bottom line and increased efficiency. It’s all so heartening for those who look at
the world for an economic bent. The
pending merger between VW and
Porsche? Uhh, not so much. This transaction in the making has been a soap
opera for quite some time now. Granted
there was that little bit of excitement last fall when we got to watch close up
the financial world’s equivalent of the dodo bird – the stock
corner. Although fun and exciting
(if you’re not on the wrong end), it’s also now illegal in the US, so don’t
expect to see another one soon.
Although Porsche reported large profits on the VW corner last fall the transactions involved left Porsche saddled with debt and vulnerable. VW, led by Ferdinand Piech, have spent the last year hunting down Porsche, in part I suspect to exact revenge. Bad blood between Piech and now former Porsche CEO is no secret apparently. Had Wiedeking at Porsche succeeded in acquiring VW, Piech no doubt would have been out. But it’s also more complicated. Ferdinand Piech is grandson of Ferdinand Porsche (founder) and part of the Porsche family group that controls Porsche. One wonders whether there are fiduciary concerns here given the role of the Porsche family and Piech, sure, but if the Germans had Thanksgiving, I wonder what the dinner conversation must have been like!
In the end, family controlled Porsche board had two options on the table: First, accept an infusion of capital from Qatar and leave Porsche CEO Wiedeking in place and maintain the company’s independence or; second, agree to be acquired by VW and permit the Porsche family through Piech and his group to control both VW and Porsche. It looks like they’ve finally opted for the latter.
A sidenote – after the Porsche board met and decided to go with VW yesterday, CEO Wiedeking was promptly sent packing with a $71 million golden handshake. The payout is raising hackles in Europe. To his credit though, Wiedeking has pledged to give half of this amount away to charity.
July 24, 2009 | Permalink
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wow, t$71 million is a lot money. why are they given such big amount when the company has just gone bankrupt
Posted by: P.D.W | Nov 4, 2009 12:36:49 AM