Economic conditions force Porsche to delay majority acquisition of VW
11/26/2008, 6:19 PM
By Drew Johnson
Before it became public knowledge that the Big Three automakers were on the verge of collapse, one of the biggest stories in the industry was Porsche’s plan to take a majority stake in Volkswagen. However, the same economic conditions that have sent the Detroit automakers down a slippery slope are also affecting Porsche, forcing the German automaker to revises its plan to take a majority stake in VW this year.
According to Porsche CEO Wendelin Wiedeking, Porsche will no longer be bumping its stake in VW from 42.6 percent to 75 percent this year. Wiedeking cited lower than expected sales and “economically ridiculous” prices of VW’s shares for the change of course.
Like all automakers’, Porsche sales have fallen sharply this year, particularly in the U.S. – Porsche’s largest market. Porsche has already started a cost cutting initiative to help offset slumping sales, according to Automotive News.
Despite the setback, Porsche still plans to take a majority stake in VW during 2009.
11/26, 8:20 PM
posted by:
A4
GOOD THATS WHAT YOU GET
11/26, 8:21 PM
posted by:
stick2clutch
This articall is a bit deceiving. Porche profited 8.56 billion euros in the last fiscal year. Seven of which were generated by holdings in VW. This was 46 percent higher than last year. Decline in auto sales had nothing to due with it.
11/26, 9:15 PM
posted by:
mayer_ray_nagin
Ach du scheisse! Wie die mächtige gefallen sind!
11/27, 12:55 AM
posted by:
johnnycanuck
The last time I had economic conditions delay a majority acquisition I ran out of quarters.
11/27, 5:07 AM
posted by:
fan
why would they buy VW at their current high? theyd be QUITE ill advised if they did, itd be burning money, and THAT would be outright stupid
11/27, 11:05 AM
posted by:
scratchy
Porsche wanting to own VW is a family obsession more than anything.
11/27, 12:06 PM
posted by:
stick2clutch
@FAN, exactly my point.
11/27, 3:43 PM
posted by:
THellURider
Well, interestingly, Porsche caused this high valuation of VW when they announced that head options to take a 75% stake in the firm. Bavaria owns a 16% or so stake in VW, so the price jump was due to the number of investment banks that had millions worth of derivatives betting that VW shares would climb; however the more or less 9% free float left them all running scared to cover their short positions and thus; the price jumped as demand went through the roof. Banks lost MILLIONS that day.
http://www.forbes.com/2008/10/28/volkswagen-porsche-closer-markets-equity-cx_ll_lal_1027markets46.html
I’d be very surprised if they didn’t act on it. Maybe this is just a tactic to get people to back away from the stock a little. These things aren’t as frowned upon in Germany as they are in the US.