Collision Course

COLLISION COURSE
By Daniel Schäfer in FrankfurtPublished: May 25 2009 20:12 | Last updated: May 25 2009 20:12
In any list of career mistakes, a letter written by Arno Bohn 17 years ago would rank highly. As chief executive of Porsche, he wrote to Ferdinand Piëch to suggest the grandson of the founder of the German sports carmaker should resign from the supervisory board of the company, then on the brink of bankruptcy.
This article can be found at:
http://www.ft.com/cms/s/0/a4452134-495b-11de-9e19-00144feabdc0,_i_email=y.html

Ferrari Sets Auction Record & Porsche vs. VW – Video

Volkswagen stymies Porsche attempts to merge

May 18, 2009 – 12:01 am ET
UPDATED: 5/18/09 12:45 a.m. ET

FRANKFURT (Reuters) — Volkswagen AG froze talks over a merger that could bail out majority owner Porsche SE, leaving the luxury sports car maker scrambling to reassure investors a deal to unite the two was still alive.

Porsche insisted the talks to create a sweeping automotive empire were still on and that it faced no short-term financing issues. But the standoff heightened market concern about how the firm would fund its 9 billion euro ($12.1 billion) debt load — sending its shares down more than 9 percent at one stage today.

A Porsche source confirmed a report it had asked German state bank KfW whether it could qualify for 1 billion euros in loans. Porsche said it had not applied for state aid.

With nerves already stretched after VW called off merger talks set for Monday, a source close to Volkswagen Chairman Ferdinand Piech told Reuters that a meeting scheduled for Wednesday was also canceled. Discussions could only resume if Porsche sheds more light on its finances, the source said.

The news focused attention on the potential financial risk posed by Porsche’s complex web of derivative contracts, which have undermined its attempts to forge closer ties with conservatively funded VW.

“We must get a clear idea of the true state of affairs at Porsche. We need absolute transparency with regard to the present situation,” Volkswagen CEO Martin Winterkorn wrote in a letter to staff seen by Reuters.

“It is in the interest of all concerned, our employees, all shareholders and our customers to ensure there is no threat to Volkswagen’s financial stability and autonomy.”

Porsche amassed debt while building a 51 percent voting stake in Europe’s largest carmaker. Porsche’s accounts show that cash flows at its healthy sports car business are sufficient to make interest payments but not pay off the principal.

Debt-reduction option

One way for Porsche to get rid of its debt would be to cash in its cash-settled call options which are estimated to cover 20 percent of VW voting shares.

A Porsche spokesman said the company had “no intention to unwind cash-settled call options related to Volkswagen shares” and that Porsche could refinance itself to the end of June.

The potential downside risk to VW ordinary shares has led some analysts to recommend switching into VW preferred stock, whose valuation was never influenced by takeover speculation.

Sal Oppenheim, which downgraded Porsche preferred stock to “sell” from “reduce” this month, said the company was “sliding towards disaster” and cut the stock’s fair value to 20 euros per share from 30.

“The longer Porsche waits with the announcement of the rights issue, the more Porsche pref shares will fall and the higher the number of shares Porsche will have to issue,” the bank wrote on Monday.

Porsche SE’s non-voting stock fell as much as 9.3 percent and traded 1.8 percent lower at 40.50 euros by 3:18 p.m. in Frankfurt. Its ordinary shares are held by members of the Porsche and Piech clans, which met on Monday to try to resolve their strategy.

Senior Porsche labor leader Uwe Hueck said during a pause in the family talks that Porsche Chairman Wolfgang Porsche and Hans-Michel Piech — brother of the controversial VW supervisory board head — had assured him that the family could guarantee the independence of the Porsche AG sports car unit.

He spoke as more than 6,000 Porsche staff marched to insist VW not be allowed to take over the maker of 911 sports cars.

The “Man Kitchen” by Porsche

By Robert Frank

One of the many ill-considered side effects of the luxury craze is crossover design. Car makers are suddenly putting their names on watches (Bentley, Ferrari), watchmakers are putting their name on cars (Swatch), clothing designers are putting their names on private jets (Versace), and gownmakers are putting their names on suitcases (DVF).

What’s next? You guessed it: the Porsche kitchen. According to this post on Luxist, Porsche’s design group (a unit of Porsche AG) has created the “man kitchen.” (Can we call it a Manchen?) The kitchen’s “sleek and functional design language specifically addresses male customers,” says the press release. As the folks at Core 77 point out, that design language doesn’t seem to include the word “handles.”

Sounds logical right? You’re a guy who likes Porsches. Why not have a fridge to match?

The Porsche kitchen is loaded with gadgets and metal, including a high-tech audio-visual system and wall-to-wall aluminum. True to the idea of a man’s kitchen, it’s also completely absent of any of signs of food or eating, looking more like an oversized car dashboard than a hearth for feasts and family. I couldn’t find a price on the kitchen, but I’d guess it’s not cheap. Maybe they’ll even come out with Porsche-like model names, like the “911 Dish Rack” or the “Cayenne Cooker.”

Here’s a novel idea: How about Porsche stick to cars, Versace stick to clothing and luxury companies focus on what they do best — making high-quality products for a specialized market. After all, would Porsche honestly expect anyone to buy a Krupps Roadster or a KitchenAid SUV?

Porsche, VW Agree to Merge Operations (May 7, 2009)

By CHRISTOPH RAUWALD

FRANKFURT — Porsche Automobil Holding SE and Volkswagen AG, two storied names in German car making, said they will merge operations, uniting 10 auto brands into a single company.

Following a meeting Wednesday of the Porsche and Piech families, who own Porsche, the auto maker said a task force representing both companies will hammer out details of the new company’s structure over the next four weeks.

Porsche, which holds a 51% stake in VW, said the families discussed proposals laid out by the executive boards of Porsche and VW — including “capital measures” — and agreed that the two operations should be united.

Volkswagen said in a separate statement that it welcomed the two families’ decision and pledged to support the task force working on the new company’s structure.

Porsche, where the two families control 100% of the voting stock, said the task force will include representatives of VW’s second-largest shareholder, the German state of Lower Saxony, and labor representatives from both companies.

The merger plan marks an end to Porsche Chief Executive Wendelin Wiedeking’s ambitious plan to raise the company’s stake in VW to 75% and push for an agreement that would give him full access to VW’s cash reserves.

In January, Porsche, which is based in Stuttgart, raised its stake in VW, Europe’s largest auto maker by sales, to 51%. But, in doing so, Porsche’s net debt almost tripled to €9 billion ($12 billion), amid tight credit markets and slumping global auto sales, sparking fears among investors about its finances.

Porsche has been reaping huge big profit from its shareholding in VW since it started quietly to accumulate its stake in 2005, when the Wolfsburg-based company was undergoing a painful restructuring amid dwindling sales and earnings.

In the fiscal first half, ended Jan. 31, Porsche’s net profit more than quadrupled to €5.55 billion, from €1.26 billion a year earlier.

Pretax profit jumped to €7.34 billion from €1.66 billion, with the increase stemming largely from cash-settled option transactions in VW shares. Income from such transactions rose to €6.84 billion from €850 million a year earlier.

But as credit markets turned sour, Porsche faced increasingly stiff headwinds from its banks. Porsche’s €10 billion loan refinancing had a nail-biting end after a late-night conference call in March between the company and the banks because of the reluctance on the part of some lenders to participate in the deal.

Adding to Porsche’s obstacles at VW was the so-called Volkswagen Law, which gives Lower Saxony veto power on important company decisions through its stake of just above 20%. This effectively prevented Porsche from exercising the voting power it would usually have through a majority shareholding.

The German government has shown little willingness to abolish the VW Law despite criticism from the European Commission.

—Carol Dean contributed to this article.

Write to Christoph Rauwald at christoph.rauwald@dowjones.com

Porsche Gains Nearly 75% of VW, Tightening Grip (October, 2008)

By CHRISTOPH RAUWALD

FRANKFURT — Porsche Automobil Holding SE on Sunday said it had a near-75% stake in Volkswagen AG, a much larger stake than the market expected, and said it wanted to tighten its grip on Volkswagen with a so-called domination agreement that would give it access to Volkswagen’s cash flows.

Wendelin Wiedeking

Porsche announced it had control of 31.5% of Volkswagen through cash-settled options in addition to the 42.6% of shares it currently holds, leaving it just 0.9% short of the 75% level needed to log Volkswagen’s revenues and assets in its own books.

Previously, Porsche’s Volkswagen stake was known to be 35.14% plus an undisclosed number of options.

“The target is to raise this to 75% in 2009, so long as the economic conditions permit, and pave the way for a domination agreement,” Porsche said.

A domination agreement under German law requires the control of at least 75% of a company’s voting rights at a shareholder meeting.

A spokesman for Volkswagen said the auto maker expected the move and continues to welcome Porsche’s investment. Porsche said it disclosed the size of its stakeholding after it became clear that there were more short-sellers in the market than it expected, who now get the chance to clear their positions without any major risk.

Investors betting on Volkswagen’s share price to fall have triggered huge share-price movements recently. The volatity of Volkswagen’s shares was partly because of its small free float, as the German state of Lower Saxony still controls slightly more than 20% of the voting rights.

Associated Press

A VW spokesman said the auto maker expected Porsche’s move and continues to welcome its investment.

Porsche’s announcement Sunday makes it clear that barely 5% of the shares are in free float.

Volkswagen’s labor unions said they “fiercely oppose” Porsche efforts to achieve a domination agreement. “It would be a catastrophe for the more than 360,000 employees of Volkswagen if managers who trample on workers’ rights take over control at this company,” said Volkswagen’s top labor representative and supervisory board member, Bernd Osterloh, in a statement.

Meanwhile, Porsche said Friday that the rift between its owners, the Piëch and Porsche families, has been resolved, and both families now fully support Porsche Chief Executive Wendelin Wiedeking’s plan to take over Volkswagen.

Last month, Volkswagen Chairman Ferdinand Piëch abstained from a crucial board vote, allowing labor representatives to push through a measure that could have hindered Porsche’s takeover plans. Under the measure, Porsche would need approval from Volkswagen’s supervisory board for any cooperation deal between it and Volkswagen’s Audi AG luxury-car unit.

Ferdinand Piech

Mr. Piëch’s abstention surprised his cousin Wolfgang Porsche, who is chairman of Porsche’s supervisory board and also serves on VW’s supervisory board. In addition, it caused confusion about the plans of the Porsche and Piëch families, which control 100% of the voting rights in the sports-car maker.

Mr. Porsche said in a statement Friday that the “committee for special business connections” formed by the board vote could be dissolved at the next meeting of Volkswagen’s supervisory board, the equivalent of a U.S. board of directors. Mr. Porsche added that Mr. Piëch backs the move to disband the committee.

“It wasn’t in the interest of Ferdinand Piëch if there were uncertainties about the joint goal of the families regarding the stakeholding in VW,” Mr. Porsche said.

Mr. Piëch, previously Volkswagen’s chief executive, has close ties with the car maker’s labor unions. His support is crucial for Porsche’s plan to take over the wheel at Volkswagen, Europe’s biggest auto maker by sales.

VW said Friday that sales in the first nine months of 2008 were up 3.9% from a year earlier at 4.8 million vehicles.

—David Pearson and Ola Kinnander contributed to this article.

Write to Christoph Rauwald at christoph.rauwald@dowjones.com

Porsche Driving Experiences

Porsche Driving Experiences in England

Porsche Design Edition One

Newest Porsche Cayman: Cheap But Thrilling Nonetheless (from Everyman Racing)

New Porsche Cayman

Newest Porsche Cayman: Cheap But Thrilling Nonetheless

The automotive world is wondering why Porsche is sending out a newer and cheaper Porsche Cayman. After all, with the Porsche Cayman S running almost double in sales than what has been expected for the vehicle, some business and marketing analysts claim that perhaps it might not be a good thing for Porsche to send out a thrilling and cheaper Porsche Cayman on the road.

The very first Porsche Cayman was produced only this year. And it took the spot that was previously owned by the Porsche 968 in the Porsche line up of exemplary vehicles. This sports car is known to be a coupe that holds two doors. It also has got two seats in its cabin. According to Porsche, the Cayman idea actually came from the inspiration of the Porsche Boxter. However, the difference is that this new vehicle now makes use of modified flat-6 engines which makes its performance and handling better and smoother compared to its idol.

When the Porsche Cayman revved up its engine and started roaring through the streets and giving the company a huge amount in sales and profit, awards also came rushing to recognize the power and performance that this sports car has. Maintenance is also fairly easy for owners and drivers for used Porsche car parts would work well with this sports car. In fact, this vehicle took a huge share of awards during the Auto Express New Car Honors awards for 2006. It also was greatly recognized as the best sporting car that one can find in the United Kingdom.

The cheaper Porsche Cayman is sold some ?7,755 cheaper compared to the Porsche Cayman S. And because of this, Porsche exclaims that other sports cars in the auto industry like the Mercedes SLK and the BMW Z4 coupe should better watch out for this one.

Author: Joe Thompson

This article is free for republishing
Source: http://www.articlealley.com

Porsche: World’s Most Recommended Brand

Porsche World's Most Recommended Brand