Volkswagen’s Porsche IPO is moving forward full steam

 

Last week Volkswagen AG announced that it will be conducting a feasibility assessment on offering Dr. Ing. h.c. F. Porsche AG on an initial basis for purchase to the public. The management board and supervisory board of Volkswagen believe that a Porsche IPO could be key to the growth of the company into a leader in electric mobility. Why does VW need a sports car company in its portfolio if it wants to build electric shuttles?

The company says it hasn’t made a final decision yet, but they’re certainly dancing around the idea a lot for there not to be at least a leaning one way or the other.

„The automotive industry is changing fundamentally. Volkswagen is determined to play a leading role in a world of zero-emission and autonomous mobility. We have set the right course with our NEW AUTO strategy and thanks to our substantial cash flows will invest with clear focus to enter new profit pools such as battery & charging, autonomous driving and our own mobility platform in the next few years. An IPO of Porsche AG would give us additional flexibility to further accelerate the transformation. Porsche AG would gain more entrepreneurial freedom and at the same time continue to benefit from group synergies,” said Herbert Diess, CEO of Volkswagen AG.

In the event of the IPO of Porsche AG, Volkswagen would still own a majority stake in Porsche. Here’s how that would break down according to Volkswagen’s recent release:

Porsche AG is envisaged to be divided into 50% preference shares and 50% ordinary shares and up to 25% of the preference shares are to be placed on the market as part of a possible initial public offering. Porsche Automobil Holding SE would acquire 25% plus one share of the ordinary shares in Porsche AG from Volkswagen AG at the placement price of the preference shares plus a premium of 7.5%.

You may remember that Porsche tried, and nearly succeeded, a semi-hostile takeover of Volkswagen in the mid-2000s. Ultimately it ended up with the government of Germany denying the buyout and settling all parties with a merger. The State of Lower Saxony ended up a major stakeholder in the resulting company, Volkswagen AG. It was all a bit convoluted, and means the German government has a say in how this IPO might shake out.

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