Porsche And Volkswagen Reach An Agreement To Form The ‘Auto Union’

German automakers, Porsche and Volkswagen have reached a tentative agreement for a merger of the two companies which could result in something called the “Auto Union”. The Auto Union will be led by VW’s CEO, Martin Winterkorn.

The idea of this agreement comes from Porsche’s failed attempt to take over the VW Group, and then running up a huge debt. The two automakers have come to an agreement which will hopefully settle the differences and then create a single company which might allow the Porsche brand to stay alive.

The terms say that Volkswagen would buy out 49 percent of the Porsche brand, where the total sales of the combined companies will then be set at around 120 billion.

Details still need to be worked out, so more news will come soon.

We’ve added a few press releases from the company as well:

Winterkorn and Pötsch appointed into Board of Management of
Porsche SE

Stuttgart. In today’s meeting, the Supervisory Board of Porsche Automobil Holding SE, Stuttgart, appointed with effect from 15 September 2009 Prof. Dr. Martin Winterkorn as CEO and Hans Dieter Pötsch as CFO of the company. They will exercise these tasks in addition to their functions as members of the Board of Management of Volkswagen AG. Since 2007, Prof. Dr. Winterkorn is CEO of Volkswagen AG, since 2003 Hans Dieter Pötsch is CFO of the automotive group in Wolfsburg.

The CEO of Dr. Ing. h.c. F. Porsche AG, Michael Macht, who is also a member of the Board of Management of Porsche SE, shall be appointed into the top management of Volkswagen AG, in order to represent the Porsche brand there. Thomas Edig, deputy chairman of Porsche AG, is a further member of Porsche SE’s Board of Management with responsibility for administration.

Supervisory Board of Porsche SE approved the Basic Agreement

Stuttgart. The supervisory board of Porsche Automobil Holding SE (Porsche SE) has approved today a Basic Agreement negotiated by the management boards of Porsche SE and Volkswagen AG, the workers representations of both companies and the Porsche SE ordinary shareholders describing the path to foundation of an integrated car group.

The Basic Agreement provides for the following steps:

• Shareholding of 42% of Volkswagen in Dr. Ing. h.c. F. Porsche AG, the 100% subsidiary of Porsche SE. The shareholding will be provided by way of a cash capital increase with an expected total return of approximately up to 3,3 bn. EUR based on an enterprise value of Porsche AG of 12,4 bn. EUR.

• A cash capital increase of Volkswagen AG taking place in the first half-year of 2010 against issuance of new preference shares. The capital increase will be approved by Porsche SE.

• Volkswagen grants an option to the shareholders of Porsche Gesellschaft m.b.H., Salzburg, to sell the operative sales and distribution business of the company to Volkswagen.

• Cash capital increase of Porsche SE most probably taking place in the first half-year of 2011 against issuance of new ordinary and preference shares, granting preemptive rights for ordinary shareholders on ordinary and preemptive rights for preference shareholders on preference shares. The ordinary shareholders of Porsche SE will approve the capital increase.

• The following changes of the articles of association of Volkswagen will be proposed to the next shareholders meeting of Volkswagen: 1. The state of Lower Saxony shall be entitled as a shareholder of Volkswagen to appoint two members of the supervisory board, as long as the state of Lower Saxony maintains a shareholding in the ordinary shares of Volkswagen of at least 15%. The implementation of such Appointment Right in the articles of association has the effect that Porsche SE will no longer include Volkswagen AG by way of full consolidation in its consolidated financial statements. 2. Confirmation of the section of the articles of association providing that shareholders resolutions, requiring a majority of 75% of the capital represented in the shareholders meeting pursuant to the German Stock Corporations Act, require a majority of more than 80% of the capital represented in the shareholders meeting.

• Agreement that, until 2020, Porsche SE will not enter into a domination and profit and loss transfer agreement with Volkswagen AG.

• Joint purpose of a merger of Porsche SE into Volkswagen AG during 2011, if at that time the legal requirements for a merger are met.

• If a merger will not take place: put option for Porsche SE and call option for Volkswagen AG to sell and to purchase, respectively, the remaining shareholding of Porsche SE in Porsche AG; the purchase price is calculated according to the same parameters as applied for the valuation of Porsche SE for purposes of the capital increase.

Condition precedents for closing of this agreement include particularly approval by the consortium banks of Porsche SE and final clarification of remaining structural issues.

Comments are closed.