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Volkswagen aims high after Porsche coup
2009-07-24
FRANKFURT (AFP) - Volkswagen is now free to focus on trying to come out a winner in the crisis rocking the world auto sector after finishing on top in its epic power struggle with Porsche. VW, the biggest European car maker, wants to overtake Toyota as the world's leading carmaker by 2018, but the boardroom epic with the sportscar icon which was resolved late on Thursday, has distracted it from this goal in recent months. "Apart from the loss of an extremely capable car manager, the end of the conflict is a relief for both VW and Porsche," the Financial Times Deutschland commented. "The saga was absurd, and all the power and style questions precluded a focus on economic reason." German press headlines nonetheless declared VW the clear victor in a bitter corporate struggle with Porsche, its biggest shareholder, after both agreed on Thursday to settle their differences and get on with a merger. "Of course there are winners and losers here - claiming anything else would be naïve," the Frankfurter Allgemeine Zeitung (FAZ) said. Investors agreed, and VW shares showed a rise of 0.79 percent to 257.01 euros in midday trading on Friday after gaining 1.21 percent the day before. Porsche shares had lost 1.64 percent on Friday, after gaining a slight 0.27 percent on Thursday. VW and Porsche agreed to form an integrated auto manufacturer by mid 2011 within which Porsche could retain its independence but without hard-charging chief executive Wendelin Wiedeking, who has resigned. Wiedeking's bold attempt to take over the much bigger VW made an enemy of Ferdinand Piech, the fearsome president of VW's supervisory board and a key Porsche shareholder. Piech emerged as top dog in a bitter boardroom battle with Wiedeking and Piech's cousin Wolfgang Porsche, another major Porsche shareholder who had backed the VW takeover bid. "Wiedeking and his main supporter, Wolfgang Porsche, have 'lost' the power struggle; VW Group and Ferdinand Piech are now clearly in the driver?s seat," the private bank Sal Oppenheim said in a research note. Nord LB auto analyst Frank Schwope was less convinced of a clear-cut victory however, telling AFP: "I am sure there are still many problems on the way for an integrated company." Qatar has not been heard from yet, he noted, and the projected date for a finalised merger "is a long long way" off, Schwope said. "A lot of things you don't expect now can happen in these two years," he noted, giving the plan a "maybe 75 percent" chance of success. Porsche would become VW's 10th brand, with an autonomy similar to that enjoyed by Audi, Bentley, Bugatti, Lamborghini, Seat, Scania, and Skoda. Meanwhile, the Gulf emirate of Qatar is to buy 17 percent of VW, the group said Thursday, and could also invest in Porsche, which wants to raise at least five billion euros (seven billion dollars) with a capital increase. Porsche must pay down 10 billion euros in debt run up while it tried to take over VW, and will progressively sell its core automaking activities to VW, a VW statement said Thursday. Wiedeking and Porsche finance director Holger Haerter "had to fall on their swords," IHS Global Insight analyst Tim Urquhart commented, though Wiedeking will receive 50 million euros in severance pay to stuff in the wound. In a bid to deflect public anger about the size of this "golden parachute," half would be donated to charities, in particular a foundation to support Porsche workers, Wiedeking said. Germany's best paid boss with estimated earnings of 80 million euros last year, he has been a lightning rod for criticism over executive salaries amid the country's worst post-war recession. Newspapers highlighted the victory of VW's supervisory board chief, with the business daily Handelsblatt running the headline: "Piech wins - Porsche cries," along with a picture of Wolfgang Porsche in tears as he spoke to workers after the decisions were announced. The FAZ commented that "Wiedeking's problem was that in this contest, which started with both of them on the same side, Piech became his opponent. "That has never been good for anyone," the paper concluded in a comment echoed elsewhere.
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