Porsche snubs VW
June 29, 2009
German sportscar maker Porsche has rejected an offer from mass automaker Volkswagen (VW) to take a 49 percent stake in the company, saying it would breach the terms of its credit arrangement with banks.
The two companies have been arguing for weeks over who will have control after a merger, planned last year when Porsche was enjoying a boom in sales, goes through.
Over the weekend VW had presented a merger proposition in which it would pay 3 to 4 billion euros ($4.2 to 5.6 billion) for 49.9 percent of Porsche AG, which owns the factories and brand.
Porsche turned down the deal on Monday, with a spokesman for Porsche Automobil Holding SE telling journalists it was "not a viable option", because it would mean that Porsche would be required to immediately pay back a 10.75 billion euro credit it had previously gotten from a bank consortium.
Porsche SE, the family-run owner of the sports carmaker which currently controls 51 percent of Volkswagen, racked a debt of 9 billion euros last year through its purchase of VW shares and options.
Impatient investors
The feud has reportedly made the Qatar Investment Authority (QIA), which is being wooed by both sides as a potential investor, impatient.
According to the German daily Handelsblatt, QIA was fed up with the battle, and was demanding the two car companies agree "quickly." The paper, quoting sources close to the negotiations, said QIA had made clear it would not invest in either Porsche or Volkswagen separately, but would only invest in a merged group.
"Qatar does not want to acquire its stake with a crowbar, against the will of Volkswagen and Lower Saxony," said a source quoted by Handelsblatt.
The state of Lower Saxony owns just over 20 percent of Volkswagen. The premier of Lower Saxony, Christian Wulff, has demanded Porsche decide, telling reporters that "all the facts are on the table."
Meanwhile, Guenther Oettinger, premier of the state of Baden-Wuerttemberg, in which Porsche is based, has taken Porsche's side in the debate, despite the fact that his state does not own any shares in the company, saying that VW should be showing more respect to Porsche as its majority shareholder.
mrm/dpa/AP/AFP
Editor: Michael Lawton