Porsche family steps on the gas to unravel VW
Volkswagen’s governance (VOWG_p.DE) is like a magic cube. The corporate structure of the 135 billion euro car manufacturer counts the Porsche-Piech family, VW bosses and public actors such as the state of Lower Saxony among the key figures, and improving one can confuse others. A possible listing of the luxury brand Porsche could help.
VW bosses have been pondering a deliberate decoupling from Porsche AG, which was taken over a decade ago after the family holding Porsche Automobil Holding (PSHG_p.DE) got into trouble for some time. Given that the luxury car brand could be worth 150 billion euros if valued at Ferrari’s 33x EBIT-to-Enterprise-Value multiple (RACE.MI), a spin-off or listing could unlock value. But it also raises sensitive questions about how such a step would affect the Porsche-Piech family, which holds 31% of VW and 53% of the voting rights, and Lower Saxony with a 12% economic stake.
The family’s most recent chess game reported to Reuters on Monday is that they would be willing to acquire a direct stake in a spun off Porsche AG. It’s not clear how they intend to do this, but there are several ways a spin-off or listing can be done.
Volkswagen boss Herbert Diess could start with a small stake in Porsche, let’s say 25%. That could add resources to VW’s switch to electric vehicles, but given the forecast the group will have € 31 billion in net cash by the end of the year, this is a sideline. The real advantage for VW shareholders would come from a complete split, in which every investor in the German car manufacturer receives a new Porsche share.
That could appeal to the Porsche-Piech family members more. With a market price for shares in Porsche AG, they could exchange part of their 31% VW stake for part or all of Lower Saxony’s stake in Porsche AG. Without spending any money, the family would own a larger stake in Porsche and restrict their dealings with other public sector shareholders, as they did before the VW merger.
The catch is that such a deal would put Diess more committed to public investors. But the unions are already deciding in favor of the VW strategy, because they and Lower Saxony have 12 of the automaker’s 20 supervisory board mandates. A deal is there to be made – just don’t bet on all sides’ ability to hit one.
consequences @gfhay on twitter
– The Porsche and Piech families, who control Volkswagen’s largest shareholder, are ready to take a direct stake in Porsche AG if the luxury car manufacturer is listed separately, Reuters reported on May 31, citing two people familiar with the matter.
– Speculations about a listing of the unit earlier this year included estimates of a separate valuation of Porsche AG of 45 billion euros to 90 billion euros (55 billion US dollars to 110 billion US dollars), compared to 135 billion euros for the Volkswagen Group .
– A possible IPO of Porsche AG is not high on the agenda, but continues to weigh up scenarios for a stock exchange listing. The main obstacle is still the complex stakeholder structure of VW.
– Volkswagen has not made a decision on whether to list Porsche AG separately and there is no guarantee that such a step will be taken, people said.
– Today the families hold all common shares in Porsche Automobil Holding, which holds more than half of the voting rights, as well as a 31.4% stake in Volkswagen.
– On June 1, Volkswagen shares were quoted at 1128 GMT at 234 euros, an increase of 2.5%. The Porsche Automobil Holding share was quoted at 97 euros, an increase of 4.9%.
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