German carmaker Volkswagen AG (VOW.XE) said Friday it would raise EUR4 billion in capital to acquire a stake in the operative business of Porsche (PAH3.XE), filling in details of a deal that will also see the highly indebted luxury sportscar maker sell a 10% stake in its holding company and its VW stock options to Qatar.

Volkswagen plans to acquire a 42% stake in Porsche AG, the carmaking arm and 100% subsidiary of holding company Porsche Automobil Holding SE, for EUR3.3 billion by the end of 2009.

The takeover of Porsche will result in total synergies of around EUR3 billion, Volkswagen Chief Financial Officer Hans Dieter Poetsch said Friday.

In a separate statement Friday, Porsche said that Qatar Holding LLC will acquire 10% of the ordinary shares of the Porsche holding company from the family owners and the majority of Porsche’s cash settled options on Volkswagen shares, freeing up more than EUR1 billion for Porsche that is currently serving as collateral for the options structure.

Porsche added it had already decided at the end of July to write down the value of the options structure by “a considerable amount” to prepare for such a sale and therefore no further writedowns would be necessary as a result of the deal.

As part of the agreement, Qatar Holding will participate with up to EUR265 million in the existing syndicated loan provided by 16 banks to Porsche, the sportscar maker said.

If the combination with Volkswagen should not take place, Qatar Holding is entitled to resell its stake in Porsche SE to the families, it added.

Qatar later confirmed that it will hold a 17% of Volkswagen’s shares along with its 10% stake in Porsche and that its overall investment commitment across all components is in excess of EUR7 billion.

Volkswagen ordinary shares declined sharply Friday, at one point trading down 27% or EUR61 lower, as traders pointed to fears that once the details of the Porsche deal are cleared up, Volkswagen shares could sink to the level of around EUR90 where many analysts have set their target prices.

Following the Porsche announcement, shares recovered somewhat to close at EUR190.70, or down 15.6%. One trader said the news that Qatar will acquire the majority of Porsche’s options eased fears that the Volkswagen options would be thrown onto the market in a disruptive manner.

The two auto makers late Thursday said they reached a basic agreement to integrate Porsche into the Volkswagen Group, which is expected to be completed in the course of 2011. The agreement concluded a failed attempt by Porsche to take over its larger rival, which backfired as the company incurred mounting debt and was forced into the hands of VW.

Specifically, VW’s operating profit will likely increase by about EUR700 million each year through the synergies, Poetsch said. The synergies will include shared development and purchasing costs, shared manufacturing platforms and revenue from Porsche sales, Poetsch said.

Through the dealings, the family owners of Porsche could maintain a 35% to 39% stake in Volkswagen, Poetsch said. The families currently own all of Porsche and slightly more than half of Volkswagen.

As such, the Porsche family owners will be largest shareholders in the combined company, followed by the German state of Lower Saxony, with a stake of around 25%. The Emirate of Qatar is expected to become the new group’s third-largest shareholder once it has exercised options to acquire VW shares from Porsche.

VW employees will have a stake of between 1% and 5% in the newly formed company, said VW works council chief Bernd Osterloh.

A new name for the company created through a merger of Porsche and Volkswagen is yet to be decided, Volkswagen said.

VW will reconsider making further new orders with auto parts supplier Magna International Inc. (MGA), if the company successfully acquires its rival, General Motors Co.’s Opel unit.

A German spokesman said Friday that Opel bidders RHJ International SA (RHJI.BT) and Magna have improved their offers for Opel.

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