VW aims high after Porsche coup

25th July 2009, Comments 0 comments

German press reports unanimously declared VW the victor in a bitter corporate struggle with Porsche, its biggest shareholder, after both agreed to settle their differences and get on with a merger.

Frankfurt -- Volkswagen was free to focus Friday on trying to come out a winner of the crisis rocking the world auto sector after emerging victorious from its epic power struggle with Porsche.

VW, the biggest European car maker, wants to overtake Toyota as the world's leading carmaker by 2018, but its tussle with the sports car maker has distracted its attention from this goal in recent months.

German press reports unanimously declared VW the victor in a bitter corporate struggle with Porsche, its biggest shareholder, after both agreed on Thursday to settle their differences and get on with a merger.

VW and Porsche agreed to form an integrated auto manufacturer within which Porsche could retain its independence but without hard-charging chief executive Wendelin Wiedeking, who has resigned.

Wiedeking's bold attempt to take over the much bigger VW made an enemy of Ferdinand Piech, the fearsome president of VW's supervisory board and a key Porsche shareholder.

Piech emerged as the victor in a bitter boardroom battle with Wiedeking and Piech's cousin Wolfgang Porsche, another major Porsche shareholder who had backed the VW takeover bid.

Now, Porsche sports cars are set to become VW's 10th brand, with an autonomy similar to that enjoyed by another high-end VW unit, Audi.

Meanwhile, the Gulf emirate of Qatar will buy 17 percent of VW, the group said Thursday, and could also invest in Porsche, which wants to raise at least five billion euros (seven billion dollars) with a capital increase.

Porsche must pay down 10 billion euros in debt run up while it tried to take over VW, and will progressively sell its core automaking activities to VW, a VW statement said Thursday.

Wiedeking and Porsche finance director Holger Haerter "had to fall on their swords," IHS Global Insight analyst Tim Urquhart said, though Wiedeking will receive 50 million euros in severance pay to sweeten the pill.

In a bid to deflect public anger about the size of this "golden parachute," half of that would be donated to charities, in particular a foundation to support Porsche workers, he said on Thursday.

Wiedeking, Germany's best paid boss with estimated earnings of 80 million euros last year, has been a lightning rod for criticism over executive salaries amid the country's worst post-war recession.

Newspapers highlighted the victory of VW's supervisory board chief, with the business daily Handelsblatt running the headline: "Piech wins - Porsche cries," along with a picture of Wolfgang Porsche in tears as he spoke to workers after the decisions were announced.

The Sueddeutsche Zeitung daily noted the "50 million payoff" to Wiedeking but underscored that Porsche "should merge into the VW group by mid 2011 as an autonomous brand."

The Frankfurter Allgemeine Zeitung commented that "Wiedeking's problem was that in this contest, which started with both of them on the same side, Piech became his opponent.

"That has never been good for anyone," the FAZ concluded in a comment echoed elsewhere.

AFP/Expatica

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