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Wendelin Wiedeking is the Sir Fred Goodwin of Germany. Like Sir Fred, the unassuming-looking Mr Wiedeking once did great things, turning near-bankrupt Porsche into a hugely profitable company. Then his audacious takeover attempt of Volkswagen collapsed under the weight of its debts. Mr Wiedeking is now driving off with a €50m bonus, although Schadenfreude may soon replace outrage: he could be dragged before the courts as has happened to other German executives, such as Mannesmann’s Klaus Esser.
The common view is that Mr Wiedeking’s departure is a defeat for Porsche, now saddled with €10bn of debt. But this ignores the broader interests of the Porsche family that a) still controls the sports car maker, which owns 51 per cent of VW, plus options over another 20 per cent, and b) includes VW’s own chairman, Ferdinand Piëch, who wants to leave his family an extraordinary legacy: a recombined Porsche/VW.
With Mr Wiedeking gone, Mr Piëch has had to opt for a less confrontational strategy. VW’s first step requires recapitalising Porsche SE, the indebted holding company. To do this, the family will “contribute” Porsche Austria, its unlisted car parts distributor, worth some €3bn, into the holding. Ordinary shareholders will meanwhile inject cash via a capital raising. Then the Qataris will take on most of Porsche SE’s options over VW; this is their passport into Germany’s industrial heartland. Finally, VW will buy a small stake in Porsche AG, the carmaker owned by the holding. This will release cash to Porsche SE.
The end result will be a debt-free Porsche SE, owning 51 per cent of VW alongside its minority partners the state of Lower Saxony, with 20 per cent, and the Qataris. The final step is to merge Porsche SE with VW. Even if the Porsche family does not end up with a majority, it will still be VW’s largest investor, a remarkable feat. VW, meanwhile, gets the stable investor base it has long craved. It will be impregnable.
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