The changing relationship between Volkswagen and Porsche

Frankfurt, September 5 – Volkswagen and Porsche share a decades-long historical connection. The eventful relationship goes back to the two companies’ common roots in the 1930s. The winding road of power struggles has reached another milestone with the possible IPO of Porsche AG, which the executive board and board want to decide on on Monday. The following is an overview of the shared history of the two traditional groups:

1931

Ferdinand Porsche opens an engineering office in Stuttgart. In doing so, he laid the foundation for the company that would later become the sports car manufacturer of the same name.

1934

Porsche receives the development order for a prototype that later becomes known as the VW Beetle and achieves cult status.

1937

The Nazi organization “Kraft durch Freude” founded the “Company for the Preparation of Volkswagens mbH” to produce the car.

1938

Porsche manages the construction of the first production hall for Volkswagen.

1960

The state-owned Volkswagen Group is privatized. Both the federal government and the state of Lower Saxony will receive a 20 percent stake in the company.

1993

Ferdinand Piech, grandson of Ferdinand Porsche, becomes CEO of Volkswagen. Its revolutionary platform strategy allows for a dramatic increase in scale while protecting thousands of jobs. This saves the company from imminent collapse.

2002

Piech appoints Bernd Pischetsrieder as his successor and becomes head of Volkswagen’s supervisory board – a position he holds until 2015.

2005

September – Porsche plans to acquire a 20 percent stake in VW and later announces a stake of 10.3 percent of the voting rights.

October – Porsche secures almost 20 percent of Volkswagen’s ordinary shares and becomes the largest shareholder in the Wolfsburg-based group. The car manufacturer strives for similar representation on VW’s board of directors.

November – Porsche’s board approves an increase in its ownership stake to 29.9 percent, leading to speculation that the company wants to take a majority stake in the much larger Volkswagen group.

2007

April – Porsche exceeds the 30 percent threshold in Volkswagen and is therefore obliged to submit a mandatory takeover offer for Volkswagen. However, the company only offers the statutory minimum, the three-month weighted average price. Almost no VW shareholders sell under these conditions.

November – Founding of the listed investment company Porsche Automobil Holding SE (Porsche SE) and admission to the commercial register. The Porsche and Piech families thus pool their holdings in the sports car manufacturer Porsche and the Volkswagen group in Wolfsburg.

2008

March – Porsche SE’s board gives the green light to increase voting rights in Volkswagen to over 50 percent.

October – Porsche SE has shares and options that give it control of 74 percent of Volkswagen’s votes. In addition, the holding company announces plans for a control agreement with the company. Volkswagen shares then shoot up as surprised short sellers are forced to buy shares at any price. As a result of this so-called “short squeeze”, the VW share rises to more than 1000 euros, and VW briefly becomes the most valuable company in the world.

2009

January – Porsche SE announces the increase of its voting rights in VW to 50.8 percent and confirms the plan to increase the shareholding to 75 percent in 2011, if conditions permit.

May – But Porsche SE is now heavily indebted and must abandon the plan to take over Volkswagen – also under the influence of the financial crisis. The holding company says it will instead seek a merger with Europe’s largest car manufacturer.

July – Porsche SE CEO Wolfgang Porsche, Piech’s cousin, calls an extraordinary board meeting on 23 July. It will advise on the possible sale of shares in Porsche SE to Qatar worth over five billion euros. A proposal by Porsche’s board to prepare a capital increase of at least five billion euros has been approved by the board. This creates the conditions for a merger with Volkswagen. Porsche CEO Wendelin Wiedeking steps down.

December – Volkswagen announces the purchase of 49.9 percent of the sports car business of Porsche SE – Porsche AG – at a price of 3.9 billion euros.

2010

January – A group of investment funds sues Porsche SE and two of its former top executives for fraud in their 2008 takeover bid for Volkswagen, in whose “short squeeze” the funds lost more than $1 billion.

April – Investment firm Elliott Associates LP announces that the lawsuit against Porsche SE for securities fraud and manipulation is expanding to more than $2 billion, and 18 investment funds have joined the lawsuit against Porsche SE.

October – Financially troubled Porsche SE announces that it may not be merged into Volkswagen before the end of 2011 as planned. According to Martin Winterkorn, CEO of both companies, the reason for this is a number of unresolved legal and tax issues in connection with the takeover.

2012

July – Volkswagen agrees to buy the remaining 50.1 percent of Porsche AG from Porsche SE for about 4.5 billion euros. Porsche’s attempt to take over Volkswagen has resulted in VW taking over the sports car subsidiary.

Carmaker Porsche AG is now fully owned by Volkswagen AG, while Porsche SE, controlled by the Porsche and Piech families, is Volkswagen’s largest shareholder and holds the majority of voting rights.

2015

Ferdinand Piech resigns from Volkswagen’s supervisory board. Four years later he dies at the age of 82.

2022

February – Volkswagen and Porsche SE are exploring a possible IPO of Porsche AG as part of a structure that would give Porsche SE a blocking minority stake in the automaker of the same name.

September 3 – Volkswagen announces that the Board of Directors and the Board of Directors wish to discuss the IPO on September 5.

The changing relationship between Volkswagen and Porsche

Source: Reuters

Cover photo: Symbolic photo

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