Porsche SE Not Certain About Merger With Volkswagen

From wire reports March 17, 2011

STUTTGART — Indebted Porsche Automobil Holding SE is preparing to draw up a strategy to attract investors as a stand-alone entity now that the merger with Volkswagen AG looks increasingly unlikely.

Hans Dieter Poetsch

“We cannot say with certainty which approach Porsche SE will take,” finance chief Hans Dieter Poetsch said on Thursday.

While the future of the Porsche SE-VW Group merger is cloudy, VW’s plan to take full control of Porsche SE’s carmaking arm, Porsche AG, remains on track. Poetsch, who is also VW Group CFO, signaled that a takeover of Porsche AG could happen without combining with Porsche SE first. VW Group has a 49.9 percent stake in Porsche AG.

Poetsch said Porsche SE wants to be an attractive investment itself and will tempt shareholders subscribing to its 5 billion euro ($6.97 billion) capital increase with a payout already in June, since the new shares will have full dividend rights to its shortened fiscal year that ended in December.

The proposal will be presented to shareholders with the invitation to the June 17 shareholders meeting at the latest, a spokesman for Porsche said.

Poetsch also forecast a profitable year, excluding any one-off effects including possible writedowns on its put and call options connected to its 50.1 percent stake in Porsche AG.

Legal and tax uncertainties have reduced the probability of the merger with Volkswagen this year to just about 50 percent, Porsche SE said last month. Despite this, Poetsch said: “We can underscore that Porsche SE’s executive board assumes that it will be possible to successfully clarify the current uncertainties and that the merger will be able to go ahead, even if this is after 2011. We know that we have the backing of important parties involved: Volkswagen, Porsche, the Porsche and Piech families as well as the employee representatives of both companies.”

The merger, originally scheduled for completion in the second half of 2011, has been hit because of legal obstacles. An investigation into share-price manipulation allegations will likely push the deal’s completion into 2012, Porsche said Feb. 24.

U.S.-based short sellers of VW stock have sued Porsche, claiming the carmaker secretly piled up VW shares and later caused the investors to lose more than $1 billion. At the same time, institutional investors in Germany are seeking 2.5 billion euros in damages over the matter.