Two feuding families, a pair of star-crossed motoring giants and civil unrest make for a dramatic spectacle, writes Derek Scally, in Berlin
WITH A bitter inter-family feud, dramatic boardroom battles and several fortunes at stake, the attempted Porsche takeover of Volkswagen (VW) is beginning to resemble one of the classic episodes of Dallas. The plan to bring VW into the Porsche stable began three years ago, and was portrayed in the media as a family affair.
After all, it was Ferdinand Porsche who designed the iconic Volkswagen Beetle, an affordable people's car, for Adolf Hitler. One of his grandsons, Ferdinand Piech, had learned the family trade before leaving Porsche to join rival Audi in 1972. Two decades later he became chief executive of Volkswagen AG, serving for a decade until becoming supervisory board chairman in 2002.
Austrian-born Piech, a towering, austere and ascetic father of 13, holds a 13 per cent stake in Porsche and was seen as a key player in the take-over talks.
But relations with his Porsche cousins had become increasingly strained in recent months as it became clear that the Stuttgarters were determined to push through a takeover very much on their terms.
Leading the talks from the Porsche side was chief executive Wendelin Wiedeking, who turned around the ailing sports car maker, making it into the most profitable car maker in the world.
To Piech's growing displeasure, Wiedeking has worked to dilute VW's famous manager-worker co-determination model, ignoring complaints from VW workers about their say in the merged company.
Particularly galling for VW's powerful workers council is the equal weighting of Porsche and VW workers at board level, although VW employs 30 times more people. The row has ended up in court, with VW works council boss Bernd Osterloh attacking Wiedeking as a "dilettante with the arrogance of an absolute monarch".
Piech shares that low opinion of Wiedeking, but after setting the Porsche takeover in motion and with no other suitor in sight, the fate of VW's workers appeared sealed.
Until last month, that is, when the workers gained an important if surprising ally after Ferdinand Piech appeared to switch sides. The VW chairman surprised board members by staying away from a crucial meeting last week, tilting the voting majority in favour of the VW workers' representatives.
They promptly passed a motion guaranteeing equal VW say in important company decisions, in particular regarding the future of Audi under a Porsche-owned VW.
Outmanoeuvred and out-voted, Porsche chairman Wolfgang Porsche stormed out of the meeting, only pausing to attack his cousin's "disgraceful behaviour".
However, this absence was just Piech's opening shot. On Monday he made an oblique dig at the Porsche management, and Wiedeking in particular, suggesting they had brought the VW workers' ire on themselves by not showing enough respect for VW history and traditions.
"I know that one can successfully lead a company with co-determination too," he told a VW company magazine.
"Sometimes at the beginning we need a little more time to find our way, but then we have 350,000 employees behind us," he said.
So far, there has been no response from Stuttgart, but the Porsche family hasn't been idle. Until now, the eight third-generation Porsche-Piech heirs have managed to work out their differences internally before they reached the boardroom. Piech's decision to break that rule last week means that Wolfgang Porsche and his family are out for revenge.
Senior Porsche managers have told German newspapers that they are examining all avenues available to sideline the 71-year-old, and clear the way for the takeover before the end of the year.
"It's not a case of if, it's just a case of when and how," said a leading Porsche manager to Focus magazine.
To sideline Piech, however, will require the support of another of VW's largest shareholders, the state government of Lower Saxony.
State premier Christian Wulff has made clear he has no interest in taking sides in the family feud and has urged "the strong personalities in VW to talk to each other and make concessions to each other".
A ceasefire is unlikely though, as is an outright coup because, as Piech demonstrated last week, without his double voting rights Porsche can be easily out-voted on the VW board by worker and union representatives.
"In my career quite a few have tried to force me out," said Piech recently, "but no one has succeeded." While Porsche family members hope there's a first time for everything, auto analysts predict a more drawn-out campaign to get even with Piech.
Already speculation is rife that they will reopen the so-called "Volkswagen Affair", a sex and bribery scandal that came to light three years ago and destroyed the careers of nearly all leading Volkswagen managers, with the exception of Piech.
He once proudly claimed that nothing happened in VW without him knowing about it but, in February, he said under oath that he knew nothing of the endemic corruption and sleaze at the heart of the company.
Investigators found no evidence to link Piech with the scandal, but some media outlets have speculated that Porsche family members might re-open the investigation in the hope of turning up new information to incriminate Piech.
This could prove extremely damaging but is seen as an extreme solution.
A more likely scenario is that Porsche will threaten to pull out of VW altogether if it is prevented from exerting more influence on the running of the company. It could sell its shares and invest in another company like Daimler which doesn't have the same regulatory straitjackets of co-determination and partial state control.
Even the hint that Porsche might dispose of their VW shares to yield-hungry financial investors has the potential to concentrate minds in Wolfsburg, bring workers into line and leave Ferdinand Piech without support. THe board at Porsche continues to plot their next move against their errant cousin.
Political and business observers have warned against letting the clash of egos distract from the long-term goal: the most spectacular company takeover in post-war German history.
The powerful German business press has almost exclusively lined up against Piech, with the Financial Times Deutschland accusing the VW patriarch of "holding 330,000 VW workers to ransom".
Meanwhile, the Handelsblattnewspaper expressed concern at the unpredictable nature of family feuds.
"They're more dangerous than any management board dispute because irrational motives play a part," it noted succinctly that " you can't fire your relatives".