The same has not been true for the tangled corporate structures of the
companies that make them. Finally, some welcome simplificationis taking
place.
Following a 2009 agreement to form an “integrated automotive group”, VW is
buying the 50.1 per cent of the Porsche AG operating company it does not
own. For this, it will pay €4.5bn in cash, plus one VW share, to the listed
Porsche SE holding company, which keeps its 50.7 per cent of VW.
Thanks to developments in German law last year, the deal will count as a
reorganisation and so escape a chunky tax bill of perhaps €1bn. (That
obstacle could otherwise have meant waiting until 2014.)
VW investors, if not German taxpayers, should be grateful. The €4.5bn price
tag – made up of a previously agreed €3.9bn equity value, a half share of
the extra synergies to be realised thanks to quicker integration and an
allowance for forgone dividends – appears very attractive.
Porsche and VW
It means VW is buying in Porsche’s business for about 4 times estimated
earnings before interest and tax. Moreover, the entire Porsche premium car
operation will have been acquired for an enterprise value of about €11bn –
which compares with its estimated revenues of €12bn, according to Goldman
Sachs.
VW will show a €9bn non-cash gain as it revalues its existing Porsche AG stake
and, while its net (industrial) liquidity will fall, there should be
earnings accretion.
What of Porsche SE? The deal leaves it with net cash but most of the
litigation liabilities resulting from its VW stakebuilding in 2008. With no
quick resolution in sight there, the worry is that its holding company
discount may widen. That would be a poor reward for investors who coughed up
in last year’s recapitalisation when a full Porsche SE/VW merger seemed more
likely.
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