Porsche deal powers VW shares
Source: Agencies |
July 6, 2012, Friday
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Print Edition
Print Edition
SHARES in Volkswagen jumped yesterday after its agreement to buy the remaining half of sports car maker Porsche, which will end a protracted takeover struggle that sparked high-profile family feuds and investor lawsuits.
VW shares rose 5.3 percent and Porsche SE holding company stock was also up 1.3 percent, after the companies announced late on Wednesday that VW would pay 4.46 billon euros (US$5.9 billion) in cash and a single common share to the holding company for the 50.1 percent of Porsche's auto business it did not already own.
"VW is getting a good deal," said London-based Morgan Stanley analyst Stuart Pearson, predicting in a note to investors that its completion would lift VW earnings by 6 percent next year. "Porsche is the world's best premium car story," he said.
With sales volumes running close to 20 percent above their previous record, Porsche's main challenge is "securing sufficient production capacity," and integration with VW may help, Pearson added. VW already plans to begin assembling some Porsche models in its own plants.
Europe's largest carmaker has pushed for rapid integration of Porsche's automotive businesses to generate annual cost savings of 700 million euros and erase about 2 billion euros of debt at the sports car manufacturer's holding company.
Porsche and VW agreed a merger in August 2009 after the maker of the iconic 911 sports coupe racked up more than 10 billion euros of debt attempting to buy VW, pitting the Porsche family against the rival Piech dynasty.
VW had abandoned the earlier merger plan last September, citing unquantifiable legal risks from lawsuits filed by short-sellers in the United States and Germany who accused Porsche of secretly piling up VW shares during its failed takeover attempt, causing investors to lose billions of dollars.
At its Wolfsburg, Germany, headquarters the company yesterday said it expected the integration of Porsche to be fully ratified by August 1.
Full consolidation of Porsche's auto-making operations will boost VW's full-year financial result by more than 9 billion euros and shrink its net liquidity by about 7 billion euros, the company has said.
VW shares rose 5.3 percent and Porsche SE holding company stock was also up 1.3 percent, after the companies announced late on Wednesday that VW would pay 4.46 billon euros (US$5.9 billion) in cash and a single common share to the holding company for the 50.1 percent of Porsche's auto business it did not already own.
"VW is getting a good deal," said London-based Morgan Stanley analyst Stuart Pearson, predicting in a note to investors that its completion would lift VW earnings by 6 percent next year. "Porsche is the world's best premium car story," he said.
With sales volumes running close to 20 percent above their previous record, Porsche's main challenge is "securing sufficient production capacity," and integration with VW may help, Pearson added. VW already plans to begin assembling some Porsche models in its own plants.
Europe's largest carmaker has pushed for rapid integration of Porsche's automotive businesses to generate annual cost savings of 700 million euros and erase about 2 billion euros of debt at the sports car manufacturer's holding company.
Porsche and VW agreed a merger in August 2009 after the maker of the iconic 911 sports coupe racked up more than 10 billion euros of debt attempting to buy VW, pitting the Porsche family against the rival Piech dynasty.
VW had abandoned the earlier merger plan last September, citing unquantifiable legal risks from lawsuits filed by short-sellers in the United States and Germany who accused Porsche of secretly piling up VW shares during its failed takeover attempt, causing investors to lose billions of dollars.
At its Wolfsburg, Germany, headquarters the company yesterday said it expected the integration of Porsche to be fully ratified by August 1.
Full consolidation of Porsche's auto-making operations will boost VW's full-year financial result by more than 9 billion euros and shrink its net liquidity by about 7 billion euros, the company has said.
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