Porsche, Piech Families Said to Discuss Volkswagen Combination

(Bloomberg) -- Porsche SE’s controlling shareholders, the Porsche and Piech families, plan to meet in Salzburg, Austria today to hash out how to combine the sports-car maker with Volkswagen AG and reduce 9 billion euros ($12 billion) of debt, according to two people familiar with the matter.

The proposals under consideration include merging the carmakers and finding an investor to buy a stake in the combined company or selling the Porsche AG automotive unit to Volkswagen in return for cash and shares, said one of the people, who declined to be identified because the talks are private.

“Structural changes in Porsche’s makeup are inevitable,” said Marc-Rene Tonn, an analyst at M.M. Warburg in Hamburg. “No one at the Porsche-Piech families is under any illusions about the size of the debt.”

The Porsche and Piech families together control half of Stuttgart, Germany-based Porsche, which has accumulated 51 percent of Volkswagen since 2005 to protect ties to the company, its largest supplier. Porsche Supervisory Board Chairman Wolfgang Porsche has struggled to raise financing to increase the stake to 75 percent and is at loggerheads with Ferdinand Piech, his counterpart at Volkswagen, about how to unite the companies.

Volkswagen spokesman Michael Brendel and Porsche spokesman Frank Gaube declined to comment on the meeting.

The Porsche and Piech families failed to reach an agreement on how to lower Porsche’s debt and combine the automakers at a gathering on April 29, one person said. Hans Michel Piech, Hans- Peter Porsche and Oliver Porsche may join Ferdinand Piech and Wolfgang Porsche at today’s meeting, the person said.

Arab Investors

Porsche CEO Wendelin Wiedeking is pushing a proposal to merge the two carmakers and allow Arab investors to bid for a stake, a person said. The plan may also require members of the Porsche and Piech families to acquire new preferred shares, the person said.

On the other hand, Volkswagen Supervisory Board Chairman Ferdinand Piech wants to transfer Porsche’s car unit to VW, a plan opposed by Wolfgang Porsche, according to the person.

Porsche, the maker of the 911 sports car, has been in talks for weeks with Arab investors including Qatar’s Emir Sheikh Hamad bin Khalifa al-Thani, the person said.

Qatar may invest in German carmakers, Qatar News Agency reported on April 28, citing Prime Minister Hamad Bin Jasim Bin Jaber al-Thani. Meetings have been held on the subject, though a decision hasn’t been made, he told QNA. A press officer for the prime minister didn’t respond to calls seeking comment yesterday.

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