Berlin: Europe's auto major Volkswagen is
set to become the world's number one, pushing Japan's Toyota
to the second place, by taking over sports car manufacturer
Porsche.
The boards of directors of Volkswagen and Porsche
endorsed the acquisition on Friday last week, ending years of
takeover struggle between the two German automobile giants,
partly owned by two estranged family clans.
Porsche, which made an unsuccessful bid to take over
Volkswagen earlier this year, would now become the 10th brand
of the VW family.
Until recently, Porsche was controlled by Porsche Holding
AG, a listed company owned by the family of VW Chairman
Ferdinand Piech, a grandson of the Porsche founder Ferdinand
Porsche, and by the Porsche family.
Porsche's attempt to take over the much bigger Volkswagen
backfired and its CEO Wendeln Wiedekind had to leave in July.
It suffered heavy losses largely due to its unsuccessful bid.
Porsche racked up huge debts to get 51 percent stake in
Volkswagen, but fell short of the 75 percent stake needed to
take over the company when it could not raise the money needed
due to the global financial crisis and drop in car sales.
In August, the two families buried their differences and
agreed to a fusion in order to protect their stakes in the
company.
In terms of the number of cars sold, Volkswagen and
Porsche are already the world’s number one, according to a
market study. The two companies sold over 4.4 million cars
world wide during the first nine months of this year compared
to 4 million cars sold by Toyota.
Ford-Mazda had combined sales of 3.7 million cars.
Financially troubled former world number one General Motors of
the United States sold 3.6 million cars.
The fusion between the two companies is being planned in
two Phases. Volkswagen will take-over 49.9 percent of Porsche
till the end of 2009 and it will be completed by 2011. Porsche
will continue to operate as an independent company within the
VW family.
Besides taking over Porsche, Volkswagen also acquired on
Friday the insolvent manufacturer of auto components and
convertibles Karmann.
The VW plans to build small cars from 2014 at Karmann’s
production plant in Osnabrueck, in northern Germany.
Volkswagen plans to invest 25.8 million euros in the next
two years with focus on Germany to build up Porsche and
Karmann and to strengthen the company’s position in world
markets, VW management announced after the board meeting at
its headquarters in Wolfsburg.
It intends to produce a new small new car under the
brand name Karmann.
A part of the new investments planned will be spent
on developing new environment friendly cars, innovative
technologies and new production plants, especially abroad.
Market analysts say that both companies will benefit from
the deal. With the support of Volkswagen, Porsche will be able
to repay its debts amounting to more than 10 billion euros.
Volkswagen would have become susceptible to hostile
takeover bids if Porsche had sold its stake.
Porsche is also an asset for Volkswagen because of is
good image and experience in marketing, which are important
above all in the US market.
The two companies together will have the broadest
range of brands and new models among all leading auto makers,
the analysts say.
Bureau Report
First Published: Sunday, November 22, 2009, 17:05