piech vs porsche, act 3 closes...

Dave dave.eaton at clear.net.nz
Tue May 12 12:06:49 PDT 2009

piech takes his play to the public.....

'03 rs6
'04 allroad tdi
OLBIA, Italy (Reuters) - Volkswagen Chairman Ferdinand Piech favors VW CEO
Martin Winterkorn over Porsche boss Wendelin Wiedeking to run a combined
VW/Porsche group.

Talking to reporters at a car launch, Piech named Winterkorn as his
candidate to head the merged group. He said it was unlikely Wiedeking would
be happy to stay on in a more "lowly" role. Such criticism from Piech has
ended the careers of other managers.

Piech also played down the chances for Porsche finance chief Holger Haerter
to take a top job in the new group, saying his counterpart at VW, Hans
Dieter Poetsch, was more credible.

Piech revealed it had been decided that the headquarters of the new group
would be in VW's home of Wolfsburg.

Piech's comments late Monday are a clear sign that Europe's biggest carmaker
has gained the upper hand in a power struggle with Porsche Automobile SE.
Porsche ran up heavy debts buying its 51 percent stake in VW and the company
has been unable to raise finance to complete its aim of taking a 75 percent
stake.  Now that its gamble to take over VW has backfired, Porsche is
fighting for influence in a merger between Porsche and VW whose brands
include Skoda, Seat, Bentley, Bugatti and Lamborghini.

Piech warned that Porsche needed first to get its 9 billion euro ($12.3
billion) of debts under control before a deal could be agreed. "I cannot
imagine that VW would assume another company's risks," said Piech, who is
also a shareholder in Porsche. He added that he was not in favor of selling
a stake in Porsche to an investor.

Porsche's stock dropped 7.5 percent on the comments, which one analyst said
raised questions about whether the carmaker could cope with its debts.
Preference shares in Volkswagen rose 2.6 percent.

Piech's remarks demonstrate how the tables have turned on Porsche after an
audacious takeover bid hatched by Wiedeking and Haerter backfired. Wiedeking
had wanted to secure access to Volkswagen's technical know-how and the car
parts that it uses.  He used share options to creep towards majority
control, making billions of euros in paper gains as Volkswagen's stock price
spiked. But the move left the Stuttgart-based group with heavy debts, which
became difficult to handle as credit markets froze.

For Piech, the merger -- which both car companies say they want to hammer
out within four weeks -- presents him with an opportunity to tighten his
grip on both Volkswagen and Porsche. Piech and his brother, who together own
just over a quarter of Porsche, have been deadlocked in a dispute with their
cousins from the rival Porsche clan, who have a bigger stake.  Swallowing
the sports car maker into the Volkswagen empire would reduce Porsche's
status to being just one car brand among 10.

Piech also signaled that there was disagreement over the value of the
Porsche sports car business, saying that an 11 billion euro price tag was 2
billion euros too high.

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