VW is set to take over Porsche
Germany's leading weekly magazine reported that VW will completely take over the sports carmaker in two transactions. These transactions, when completed, will lead to Porsche becoming the 10th brand under the VW umbrella and making it the world's largest automaker. Initially, VW was going to purchase 49.9 percent of Porsche, but the report states that a second purchase of shares will result in a complete acquisition.
Porsche had originally tried to buy VW, but its attempt failed when the economic crisis lessened the demand for luxury sports cars. The reported deal will net Porsche Autombil Holding $11.3 billion, which will help it pay off the majority of its debt. More money could roll down the pike for Porsche should VW decide to purchase Porsche's network of dealerships. The reported terms of the deal will allow the Porsche and Piech families (Porsche's shareholders) to hold 50 percent of the shares in the merged company. Lower Saxony will maintain 20 percent holdings in the company and the emirate of Qatar could purchase anywhere from 14.9 percent to 19.9 percent of the new company's shares. Finally, Porsche's CEO Wendelin Wiedeking will step down and be replaced by Porsche production chief Michael Macht.
What does this deal mean for car buyers? Not a whole lot, as no doubt those who can afford a Porsche will buy it no matter who owns the company. As for the cars themselves, I'm guessing there won't be too much of a difference either. Both car brands are built on the premise of German engineering and both companies produce quality vehicles.
That said, there is a lesson to be learned here. Porsche over-extended itself during its failed attempt to take over VW. Instead of taking over VW, this move resulted in the exact opposite as it opened the door for VW. The larger lesson is that a company should not over-extend itself when trying to expand its empire. Unfortunately, Porsche learned this lesson the hard way.
Sure seems that other automakers have been learning some tough lessons of late.