Chris Chilton, published on
Most of us are aware of Porsche’s long-standing affiliation with the Volkswagen group. But even fewer people are aware of the amazing tale of how things almost went the other way, and how little Porsche, which only produces 100,000 vehicles year, almost missed purchasing Volkswagen, which was producing over 6 million.
Don’t attend just yet if you believe you won’t be interested in the dry boardroom fare. The story is fascinating on a Hollywood thriller-level, but what’s more significant is that the Donut Media guys are the ones telling it, replete with their recognizable South Park-style cartoons.
The Porsche and Volkswagen relationships date back many years and involve some important family ties that become quite important as the story progresses. However, things really take off in the late 2000s when Porsche, which had survived its own near-death experience a decade earlier, starts buying stock and Volkswagen is still feeling the repercussions of the financial crisis.
Porsche misled the business community when it claimed it had no interest in outright purchasing Volkswagen and was only concerned with maintaining its independence, but in reality, it was surreptitiously buying stock to expand its stake in the larger company in preparation for the eventual takeover.
Hedge funds flocked to Volkswagen’s stock as a result of this behavior, anticipating a price crash that would bring each short-selling fund a windfall of money. As a result, some of them lost their shirts.
Another excellent incentive to watch this video is right there. If, like me, you’ve heard the term “short selling” but haven’t really grasped what it means or how it operates, Nolan Sykes of Donut does an excellent job of describing it by drawing a comparison between the Porsche-Volkswagen case and what transpired with Gamestop earlier this year.
As the amazing tale unfolds, we witness a preposterous scenario in which Volkswagen, which is on the verge of total collapse, temporarily holds the title of most valuable corporation in the world before some unexpected developments entirely reverse the situation. In the end, the businesses agree to merge, but VW quickly takes the lead. In all honesty, it resembles an Ocean’s 14 movie and is well worth seeing.
In This Article...
Porsche, is it a hedge fund?
Porsche was, in the words of a BBC article, “a hedge fund with a manufacturer attached.” The automotive industry did well in 2008, but the financial engineering industry performed much better. Wendelin Wiedeking, the company’s CEO at the time, earned the most money of any executive in Germany.
Porsche hedges; why?
Porsche’s ultimate goal is to minimize financial exposure for shareholders while protecting their investment and increasing shareholder value. Consequently, this hedging approach makes sense from the shareholders’ point of view.
What is the most effective hedging strategy? How does Porsche manage its foreign exchange risk?
Porsche’s approach to managing its foreign exchange exposure is eventually to lessen and strive to avoid its exposure to currency market volatility. By utilizing currency swaps and futures contracts, businesses reduce their capital’s exposure to potential market losses.
What led VW to purchase Porsche?
For Volkswagen, both financially and practically, it’s a wonderful bargain. VW acquiring Porsche should reduce expenses and increase overall revenue. VW has announced that it wants to surpass GM and Toyota as the largest producer in the world by 2018 by selling 10 million vehicles annually across its multi-brand empire.
The reason Porsche failed.
Once the agreement is made, one of the most dramatic takeovers in the auto industry will come to a close.
Its 2009 attempt was unsuccessful because it was unable to secure the necessary 75% shareholding.
The carmaker found it challenging to collect sufficient funds to purchase the necessary stake due to the global financial crisis and the downturn in the global automobile industry.
Nevertheless, Porsche racked up a lot of debt in the process and faced lawsuits from investors who claimed the company misled them.
In an unexpected turn of events, the companies reached an agreement in 2009 in which Volkswagen agreed to acquire Porsche.
What happened and how was Porsche connected to VW shares in October 2008?
When Porsche abruptly disclosed that it owned or had positions on more than 74% of Volkswagen shares in October 2008, it set off an unparalleled stock market panic. Volkswagen’s stock shot up in value to more than 1,000 euros, briefly making it the most valuable business in the world.
Who is Porsche’s greatest shareholder?
How will Porsche be managed? Following a 75 percent minus one share, 25 percent plus one share split, VW Group and Porsche SE will jointly own all of Porsche AG’s ordinary shares. Following the IPO, Volkswagen Group will hold 75 percent minus one ordinary share of Porsche AG’s whole share capital.
What might VW have done to stop Porsche from taking over?
In news reports, it was hypothesized that a consortium of investment banks might hold VW shares in their genuine form at 2.999% each, avoiding the need for independent notification, in order to hedge the call options and potentially send them to Porsche upon execution.
Porsche acquiring VW?
VW practically swallows Porsche whole; the merger is scheduled to be finalized in 2011. Porsche’s voting shares are controlled by the Porsche and Piech families, who must contribute to lessen the $13 billion (EUR9 billion) debt load that Porsche carries.
Owners of Porsche?
Volkswagen AG, which is majority owned by Porsche Automobil Holding SE, owns the German automaker Porsche. Porsche AG’s corporate offices are in the Stuttgart neighborhood of Zuffenhausen.
Who produces the Porsche engines?
Located at the Porsche Experience Center in Carson, California, just south of downtown Los Angeles, PMNA is a fully owned subsidiary of Porsche A.G. In addition to selling and maintaining customers’ racing vehicles, PMNA also constructs and rebuilds race engines for various Porsche vehicles. It will soon start producing Singer engines, but not the four-valve engine that Williams Advanced Engineering and I co-developed for the crazy DLS. Nicholson McLaren, a UK builder, will continue to make that.
1/10/22 2:30 PM Update: Of the original version of this article, Williams Advanced Engineering was credited with building the engine in Singer’s DLS. The engine is made by Nicholson McLaren but was designed with Williams.
Does VW own Porsche entirely?
Yes, Porsche’s parent company is Volkswagen Group. In 2011, Volkswagen and Porsche amalgamated. The parent business of numerous other luxury automobile manufacturers, such as Audi, Bentley, Bugatti, and Lamborghini, is the Volkswagen Group.
Is Porsche being spun off by VW?
It is a fact. On September 5, Volkswagen (VOW3) announced its intention to spin-off Porsche in an initial public offering (IPO) towards the end of 2022. However, Porsche’s convoluted ownership structure may make the IPO more difficult and prevent Porsche from being fully listed on the stock market.
Based on the outcomes of its evaluation of a potential IPO, which was conducted on February 24, VW has chosen to proceed in this direction.
According to a VW statement, “Volkswagen AG today resolved, with the Supervisory Board’s approval, to pursue an initial public offering of the preferred shares of Dr. Ing. h.c. F. Porsche AG with the target to list them on the Regulated Market of the Frankfurt Stock Exchange (Prime Standard) at the end of September/beginning of October 2022 (“intention to float”) to be completed by the end of the year.
Investors have estimated that Porsche is worth ranging from EUR60 billion ($59 billion) to EUR85 billion. The price of the VOW3 share increased by 5% the day following the announcement.
How much of VW is Porsche owned?
Despite market turbulence brought on by Russia’s war against Ukraine, VW intends to list the Porsche sports-car division.
After VW’s Porsche sports-car division is listed on the stock market, the wealthy Porsche and Piech families intend to maintain their controlling ownership of the Volkswagen Group.
Through their family investment company, Porsche Automobil Holding SE, the Porsche and Piech family owns a 53 percent stake in the Volkswagen Group.
According to Bloomberg Intelligence, Porsche SE intends to acquire a 25 percent blocking position in the anticipated Porsche IPO, which may fetch up to 90 billion euros ($99.1 billion).
According to Chief Financial Officer Johannes Lattwein on Tuesday, Porsche SE has a solid financial position and ample room to raise outside funding.
On a conference call with reporters, Lattwein stated that there are “no plans to lower the share in Volkswagen at this time.”
The IPO, the VW Group’s greatest strategic move in years, was being worked on by teams that were “very engaged,” he said.
Despite market instability brought on by Russia’s conflict against Ukraine, VW is still making plans to list the Porsche sports car division, one of VW’s major sources of profits.
The action is a part of VW’s aim to increase its market valuation and finance the largest transition in the industry to electric automobiles. It’s impossible to exclude out negative effects from the Ukrainian conflict on the IPO, according to Lattwein.
CEO Hans Dieter Poetsch, who is also the chairman of VW’s supervisory board, stated on the call that Porsche SE has “an great future ahead.”
“Cash flow is anticipated to increase even further, and the company can be expected to have both an attractive payout policy and an investment policy that is focused on the future.”
According to the agreement, the supply contracts between VW and Porsche would remain in effect, Poetsch added.
The Porsche and Piech families would be able to recover direct control over the sports car brand in what was formerly their family business under the present parameters of the IPO, which are still being negotiated.
The family would receive a 25 percent plus one share blocking minority holding under the proposed arrangement.
Lattwein said the Porsche and Piech families’ direct ownership of the brand would be financed in part by a special dividend VW had proposed.
Are Porsches merely Volkswagens?
In 2011, Volkswagen acquired Porsche. Porsche was once considered a division of Volkswagen AG (interestingly, besides being the Porsche parent company, VW also owns Audi, Bugatti, and Lamborghini). In light of this, Volkswagen AG is the entity that owns Porsche.
Is Porsche still owned by the Porsches?
Ferdinand Piech thought of VW-Porsche as the Porsche and Piech “family farm” till he passed away. Since 2009, the two families have owned the majority of the enormous Volkswagen Group, which includes 12 brands ranging from VW, Audi, and Bentley to Bugatti and Porsche.
What is the value of a Porsche?
Models of the 911 Carrera T start at $102,100 MSRP. Models of the 911 Targa 4 start at $110,300 MSRP. Models of the 911 GTS start at $120,700 MSRP. Models of the 911 Turbo: starting at $161,800 MSRP