Porsche tried to take over Volkswagen and got absorbed instead
In 2009 the sports car maker Porsche controlled more than half of Volkswagen, a company many times its size, and was aiming for three quarters. Within months, buried under debts above 10 billion euros, it agreed to hand its car business to Volkswagen. The family holding company still ended up in charge.
The ties ran deep. Ferdinand Porsche's design office had created the original Volkswagen and its factory town, today called Wolfsburg, which the German state established in 1937 and 1938. When Volkswagen was privatised in 1960, a special law required 80 percent agreement on major shareholder votes, handing a veto to any holder of more than 20 percent, notably the state of Lower Saxony. After the European Union formed in 1993, that protection looked incompatible with rules on free movement of capital, raising fears of a hostile bid.
Porsche moved to head off rumoured suitors such as DaimlerChrysler, BMW and Renault. It bought 18.65 percent in late 2005, reached 25.1 percent by June 2006 and passed 30.9 percent in March 2007, which triggered a mandatory offer that it priced at the legal minimum. In October 2007 the European Court of Justice struck down the Volkswagen Law. Porsche climbed to 35.14 percent in September 2008 and to 50.76 percent on 7 January 2009, automatically triggering bids for Audi and the Swedish truck maker Scania along the way.
The spree was paid for with borrowing, worsened by taxes on huge paper gains from Volkswagen options. By July 2009 the debts had forced a rescue. The Qatar Investment Authority injected capital, chief executive Wendelin Wiedeking left, and in August the two sides agreed on an integrated group led by Volkswagen. In 2012 Volkswagen paid 5.61 billion dollars for the rest of the carmaker, structured as a restructuring through the transfer of a single share.
The twist is that the holding company, renamed Porsche SE in 2007 and owned by the Porsche and Piech families, kept its Volkswagen stake. When a revised Volkswagen Law was approved in 2013, it became the controlling owner, holding the majority of voting rights.
Source: Porsche SE
