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Porsche, VW look to historic German auto tie-up
2009-07-21
FRANKFURT (AFP) - Top boards at Porsche and Volkswagen are to meet separately Thursday in a bid to replace acrimony with a historic alliance that could include Qatar. Offers for Porsche stakes based on two industrial strategies and backed by the sports car maker's controlling clans will go head-to-head, with chief executive Wendelin Wiedeking's post hanging by a thread. An 11th-hour tax issue has also cropped up but did not seem to pose a major problem. On Thursday, VW will be first off the line, starting its special meeting of the supervisory board at 1000 GMT at Stuttgart airport, southwestern Germany, with Porsche following four hours later at its headquarters in Stuttgart. The agendas cover the futures of the two groups, which have been closely linked since January when Porsche acquired almost 51 percent of the shares in VW, the biggest auto maker in Europe. Porsche, burdened with about 10 billion euros (14 billion dollars) in debt, abandoned in May a plan to take full control of VW and its hefty reserves of liquidity, and must now find other sources of financing. The German state of Lower Saxony, which owns 20 percent of VW and holds a veto over its strategic decisions, stood between Porsche and VW's cash. As for whether the VW or Porsche vision will prevail, Lower Saxony regional Premier Christian Wulff said last week: "We will know the solution on Thursday." VW declined to comment when contacted by AFP, but both companies remain prudent with respect to what might come out of the meetings. "We will see at the last minute," an industrial source said, while Nord LB bank analyst Frank Schwope told AFP a final decision was unlikely to emerge. A Porsche spokesman said: "We do not know what the family will decide." All of Porsche's voting rights are owned by the Porsche and Piech families, and they have scheduled a regular meeting of the supervisory board one week later. On Thursday, Porsche boss Wendelin Wiedeking will push for Qatar to buy a stake in the company along with VW stock options owned by Porsche, allowing the maker of the 911 sports car to retain its independence. Meanwhile, the head of VW's supervisory board and major Porsche shareholder Ferdinand Piech wants VW to buy half of Porsche's core automaking activities now and the rest later, making it the group's 10th brand. Qatar could take a stake in the combined group under that scenario. But it might incur a hefty tax penalty stemming from a spin-off of Porsche's auto unit according to Dow Jones Newswires, which quoted people familiar with the matter. "That is not a real problem," Schwope said, "this is an artificial obstacle" and possibly a defensive manoeuvre by Porsche that could probably be resolved by regional governments. German media, meanwhile, have reported a flurry of rumours from unidentified sources about Wiedeking's imminent resignation. Porsche has rejected the speculation, but Schwope said Wiedeking would not run an integrated company which he saw being led by current VW chief executive Martin Winterkorn. Wiedeking is backed however by key shareholder Wolfgang Porsche and the head of Porsche's works committee, union leader and former boxer Uwe Hueck. "We are going to fight, by all means possible," Hueck was quoted by press reports as saying. The image of Porsche and VW have been tarnished by months of haggling as both are slammed by the global automobile crisis, and a strike at Porsche would undermine VW management in the event of a takeover. "Let's try to untangle the knots on Thursday so Porsche and Volkswagen can take on the competition and concentrate on making automobiles," Wulff suggested.
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