AFTER ALMOST eight decades in family ownership, Porsche is to sell a quarter stake to Qatar to ease crippling debts run up in the botched Volkswagen takeover.
The Persian Gulf emirate is prepared to pay as much as €2.5 billion for its stake in the Stuttgart sports car firm, just three months after Abu Dhabi’s €1.95 billion investment in Daimler.
A spokesman for Porsche has confirmed the talks are proceeding "in a good atmosphere" – and exclusively with the emirate. A source close to the talks told Der Spiegelmagazine that emirate negotiators have already completed their due diligence of Porsche and an extraordinary shareholder meeting in early July could approve the capital hike.
Deal insiders say the vast majority of members of the two family wings – Porsche and Piech – are resigned to the deal.
Only Ferdinand Piech, a grandson of company founder Ferdinand Porsche and chairman of VW, is understood to be opposed, though his personal shareholding is too small to block the deal.
It’s a dramatic reversal of fortune for the industry’s most profitable company, and the second time in two decades that it has faced ruin.
Four years after first buying into VW, Porsche is saddled with €9 billion in debt after borrowing to buy VW stock at ever-increasing market prices.
Its search for external sources of funds to refinance this credit has become critical in recent months, with Porsche’s usual banking partners unwilling to renew their loans.
For months, the luxury car company has conducted an increasingly desperate hunt for fresh sources of capital.
As well as its long-term liabilities, Porsche needs around €1.75 billion to cover its day-to-day activities. It has even joined the long queue of companies asking the federal government in Berlin for a loan.
The begging-bowl business is humiliating for Porsche chief executive Wendelin Wiedeking: he is on record claiming “most companies that received state aid went broke anyway, sooner or later”. And, even more damning: “One should never overdo things by biting off more than one can chew.”
Just how much cash and sympathy he can expect from politicians in Berlin will depend on whether they view the Porsche crisis as a genuine hardship case or simply a case of hubris, of a company that overextended itself on a bid for a company 15 times its size.
It is unclear the effect Qatar’s arrival on the Porsche board will have on a VW take-over.
Speculation is growing that the new shareholder will take over Porsche share options to buy the remaining 24 per cent of VW shares not owned by the Stuttgarters.
“Giving up the options to Qatar would be the quickest way for Porsche to gain liquidity,” said Dresdner Bank analyst Uwe Treckmann.