Porsche was recently forced to sell a 10% voting stake to Qatar Holding LLC in order to bolster their financial position. This transaction marks the end of an era for Porsche, as up until now all control of the business had been in the hands of the founder’s family since the brand was conceived in 1948. Recently Porsche sold a small stake in their sports car business to Volkswagen, though no voting rights were attached.
In the complex deal, Porsche is selling a 42% stake in Porsche AG for about $4.7 billion, and also sold a package of cash-settled options on VW shares to Qatar, which they say will free up approximately 1 billion euros in cash.
All this comes after a failed takeover attempt by Porsche of Volkswagen, whereby Porsche took on more than 10 billion euros in debt while buying a 50% VW stake and a package of derivatives that gave Porsche control over an additional 20 percent of VW stock.
The two families currently in control of Porsche, the Piech family and the Porsche family, will also well their auto trading business in a del to be completed by 2011. The business currently has an enterprise value of 3.55 billion euros. The two families will remain the largest shareholders in the new combined company though, as they will retain between 35& and 45% ownership.
– By: Stephen Calogera