Now, Ferdinand Piech - ex-Audi, ex-VW CEO, now chairman of the boards of both VW and Porsche - is using the highly profitable business to wrest control of VW AG back from the militant Hannover chapter of Germany's powerful IGM union.

Step 1 in this drawn-out battle of wills was the acquisition of 30.1% of VW shares and the associated mandatory pro forma takeover offer.

Step 2 was acquiring call options on enough additional stock to acquire an outright majority. These have to be exercised between now and sometime next spring.

Step 3 was setting up a holding company under EU rather than German law. This gave Wiedeking et al. the chance to ensure that worker representation on the board would be split evenly between the compliant Porsche workforce and the much larger - and much more militant - VW workforce. The latter will actually get to sit at the table only after Porsche actually increases its stake to above 50%, but IGM representatives are already suing anyhow.

One of the provisions in the Lex VW that the EU court did not topple states that production sites cannot be moved or closed unless there is a two-thirds majority for it on the board. Between management and the Porsche workers' representatives, it would in theory be possible to overrule VW's workforce. Hitherto, that had been impossible due to the quasi-permanent alliance between the IGM and the state of Lower Saxony, which holds ~20% of VW AG's shares.

Theoretically, incorporation as an EU entity also gives the Porsche-Piech clan the option of relocating its headquarters to any other EU country. In that case, it would pay corporate tax there rather than in Germany. This is something of a nuclear option in case German politicians decide to try and meddle in the restructuring process.

Step 4 was waiting for the EU Commission to win its case against the Federal Republic of Germany in the European Court. It essentially ruled that special rights granted to the federal authorities and the state of Lower Saxony are anti-competitive and therefore in contravention of EU law, which supersedes national law. It's now up to the German Bundestag to amend the law in accordance with the verdict. Alternatively, a meeting of VW shareholders can change the company's statutes. However, this is a formality and the board has already agreed to suspend the offending articles effective immediately. Among other things, this means Porsche 30.1% stake now translates into the corresponding voting weight.

Step 5 will be to actually the new holding company's stake in VW to over 50%, which has apparently been deferred to 2008. This is supposedly because the VW share price is currently quite high, i.e. Wiedeking is hoping it will fall below the face value of his options. A massive line of credit to fund the acquisition has been in place ever since the mandatory pro-forma takeover offer.

Dr. Wiedeking has expressed dissatisfaction with the lack of joint projects with VW beyond the Cayenne/Touareg and the Panamera. There is also talk of pressure from Porsche not to outsource any more projects to ailing convertible specialist Karmann while VW's own plants are running at less than full capacity plus, a demand to return the SEAT brand to profitability or to sell it off.

In other words, Wiedeking and the Porsche/Piech clan want VW to finally behave like a normal company with profit goals. Maximizing employment opportunities for IGM members will no longer be at the top of the priorities list, though the IGM is not at all ready to concede defeat just yet.

rgseidl

toyotaboy

CEman

lascauxcaveman

icntdrv

Mark Arnold

LemursGT

The operative business of Porsche is now a wholly owned subsidiary called "Dr. Ing. h.c. F.Porsche AG" within the new company Porsche Automobil Holding SE.

Wiedeking stressed that "We will not integrate the Porsche and Volkswagen enterprises into a network organization. Not only is this no wedding made in heaven; we aren't even getting married on earth."

Hamslamm

Hamslamm

But about this post; Porsche is gonna make VW's now? This is good how?

Benson2175

BTW, no Czechloslovakia...just the Czech Republic now...

SeanKHotay

FLB

Have you ever driven a 928? It's not the overweight pig that it's made out to be. Man, I'm starting to feel like I'm in the JFG vote-out all over again, defending the 928 and all.

hwyengr

CEman

Beat me to the joke.

Next, they annex the sudetenland.

Seth L

For a brief look into the history of Volkswagen, have a look at those two articles:

VW part 1: [www.thetruthaboutcars.com]
VW part 2: [www.thetruthaboutcars.com]

benztown

town

They share so many parts and engineering that I assumed we were looking at the German Cadillac-Buick-Chevy

(gasp! did he just compare Ze Germans to The 'Muricans?)

Didn't know there was no official ownership connection until now.

Mad_Science

benztown

PeteJayhawk

3wheeler

SeanKHotay

NovaloadMissesPolar

On the flipside of that, after several years of decline German brands are increasing both their market share and sales volume in the US and this is certainly true for VW. Sales in Europe are increasing and hit 15.5 million units last year and that number is expected to be larger this year. With Eastern European economies growing, you can expect European car sales will continue to climb for at least a decade.

It wouldn't surprise me if Europe pulled even with the US in less than a decade in terms of the auto market.

[www.ita.doc.gov]

eltonito

This ruling may compel Porsche to make a formal bid for VW; but it will be a derisory offer below market value.

al_beaton

And seriously, if VW=bland, then Toyota=automotive equivalent of Lunesta. But that strategy has certainly worked for ToMoCo lately, hasn't it?

Tomsk

lascauxcaveman

B

@no_slushbox: Hahaha. I said the same thing to some of my friends earlier in the year when a discussion of the VW law came up.

respawn

BTY, any car makers in Czechoslovakia?

Hamslamm

CEman

CEman

zamafir

zamafir

Triborough

snep

Da5idRicardo

RalphieDC

TinaChow

On an aside, Porsche influence in VW has always been strong, so strong. Piech, arch-overlord of the VW group is Ferry Porsche's, er, nephew. VW group are, of course, making cars with Porsche input to rival, er, Porsches. The entire situation is more than a little incestuous, and makes me feel queasy sometimes.

cmdrfire

TheGuinnessTooth

TeacherSnake

no_slushbox

TheGuinnessTooth

And then he used those Beetle parts in the 356.

The Cayanne / Tourag continues that tradition.

Mabye the next Beetle will have a flat-6 out back?

jakay11

POLAЯBEEЯ

Trevor

Andrewpetty

thebullfrog

respawn