-
FRANKFURT -- Porsche shares fell as much as 11.7 percent on Monday on concern its plan to take a 20 percent stake in Volkswagen would wipe out cash that the world's most profitable carmaker might have given investors.
While the voting stake in Europe's biggest carmaker would cost some 3.3 billion euros ($4 billion), Porsche said it could still finance projects such as its new Panamera sports coupe.
VW shares initially rose and then slipped as Porsche's plan torpedoed talk of a hostile bid.
The deal also sparked grumbling that VW's drive to slash manufacturing costs could lose steam if Porsche's entry secured majority control for Porsche, VW itself and the German state of Lower Saxony in an all-German public-private alliance.
'The recent surge in VW is now explained, but this deal is depressing confirmation that the old ways of German capitalism die hard,' Sanford Bernstein analyst Stephen Cheetham said.
VW stock had soared 17 percent last week on heavy volume, prompting talk that a strategic investor was building a stake.
Porsche, which says it has less than 5 percent of Volkswagen, gave no details on how it intended to boost this. A spokesman declined comment on whether investment bank Merrill Lynch was buying or had bought stock for Porsche.
Worried that a European court may overturn in 2007 Germany's so-called 'VW law', which caps shareholders' voting rights at 20 percent, Porsche says it had to act to prevent any VW takeover that could disrupt stable business ties.
Volkswagen makes the chassis for Porsche's Cayenne offroader and is working with Porsche to develop hybrid engines. VW supplies 30 percent of the content in Porsche's sales volume.
GERMAN PERSPECTIVE
Lower Saxony, VW's home state, is the largest shareholder now with 18.2 percent of VW voting rights and reaffirmed on Sunday it was committed to holding its VW stake. Volkswagen holds a 13 percent voting stake in treasury shares.
VW has made clear it cannot sell its treasury shares unless this is linked to an acquisition. For instance it planned to sell a big stake to the Gulf emirate of Abu Dhabi last year to help finance the purchase of a 50 percent stake in fleet management business LeasePlan, but these talks fell through.
'The decisive thing for the development of VW shares in the next few days is whether and at what price Porsche can acquire the 13 percent of shares that VW holds itself,' said Stephan Droxner, analyst at Landesbank Baden-Wuerttemberg.
No VW officials were immediately available for comment.
'The state government has been in contact with various automakers for a long time, because we have known for years of American carmakers' interest in getting into Volkswagen,' Lower Saxony state Premier Christian Wulff told the Hannoversche Allgemeine Zeitung paper. 'We tried to cooperate with the United Arab Emirates. Porsche offers a German perspective. We can generate synergies.'
Turning to Porsche also draws on long-standing family ties.
Volkswagen Chairman Ferdinand Piech, whose family is a main Porsche shareholder, is the grandson of Porsche's founder, Ferdinand Porsche, the man who developed the legendary VW Beetle as a 'people's car' for Adolf Hitler.
Deutsche Bank cut its rating on Porsche shares to 'sell' on Monday, setting a price target of 550 euros per share.
JP Morgan suggested taking profits in both stocks.
But CSFB recommended buying into weakness in Porsche shares, noting the deal made long-term strategic sense by securing production of the Cayenne and perhaps using spare VW capacity at some stage to make the four-door Porsche Panamera.
-
FRANKFURT -- Porsche shares fell as much as 11.7 percent on Monday on concern its plan to take a 20 percent stake in Volkswagen would wipe out cash that the world's most profitable carmaker might have given investors.
While the voting stake in Europe's biggest carmaker would cost some 3.3 billion euros ($4 billion), Porsche said it could still finance projects such as its new Panamera sports coupe.
VW shares initially rose and then slipped as Porsche's plan torpedoed talk of a hostile bid.
The deal also sparked grumbling that VW's drive to slash manufacturing costs could lose steam if Porsche's entry secured majority control for Porsche, VW itself and the German state of Lower Saxony in an all-German public-private alliance.
'The recent surge in VW is now explained, but this deal is depressing confirmation that the old ways of German capitalism die hard,' Sanford Bernstein analyst Stephen Cheetham said.
VW stock had soared 17 percent last week on heavy volume, prompting talk that a strategic investor was building a stake.
Porsche, which says it has less than 5 percent of Volkswagen, gave no details on how it intended to boost this. A spokesman declined comment on whether investment bank Merrill Lynch was buying or had bought stock for Porsche.
Worried that a European court may overturn in 2007 Germany's so-called 'VW law', which caps shareholders' voting rights at 20 percent, Porsche says it had to act to prevent any VW takeover that could disrupt stable business ties.
Volkswagen makes the chassis for Porsche's Cayenne offroader and is working with Porsche to develop hybrid engines. VW supplies 30 percent of the content in Porsche's sales volume.
GERMAN PERSPECTIVE
Lower Saxony, VW's home state, is the largest shareholder now with 18.2 percent of VW voting rights and reaffirmed on Sunday it was committed to holding its VW stake. Volkswagen holds a 13 percent voting stake in treasury shares.
VW has made clear it cannot sell its treasury shares unless this is linked to an acquisition. For instance it planned to sell a big stake to the Gulf emirate of Abu Dhabi last year to help finance the purchase of a 50 percent stake in fleet management business LeasePlan, but these talks fell through.
'The decisive thing for the development of VW shares in the next few days is whether and at what price Porsche can acquire the 13 percent of shares that VW holds itself,' said Stephan Droxner, analyst at Landesbank Baden-Wuerttemberg.
No VW officials were immediately available for comment.
'The state government has been in contact with various automakers for a long time, because we have known for years of American carmakers' interest in getting into Volkswagen,' Lower Saxony state Premier Christian Wulff told the Hannoversche Allgemeine Zeitung paper. 'We tried to cooperate with the United Arab Emirates. Porsche offers a German perspective. We can generate synergies.'
Turning to Porsche also draws on long-standing family ties.
Volkswagen Chairman Ferdinand Piech, whose family is a main Porsche shareholder, is the grandson of Porsche's founder, Ferdinand Porsche, the man who developed the legendary VW Beetle as a 'people's car' for Adolf Hitler.
Deutsche Bank cut its rating on Porsche shares to 'sell' on Monday, setting a price target of 550 euros per share.
JP Morgan suggested taking profits in both stocks.
But CSFB recommended buying into weakness in Porsche shares, noting the deal made long-term strategic sense by securing production of the Cayenne and perhaps using spare VW capacity at some stage to make the four-door Porsche Panamera.
Η Porshe αγοραζει το 20% της Volkswagen