Porsche boss braces for boardroom clash

July 19, 2009
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, FRANKFURT, Jul 19 – Embattled Porsche chief Wendelin Wiedeking is gearing up for one of his toughest board meetings on Thursday, when the debt-laden sports car maker\’s fate could take a decisive turn.

An extraordinary meeting of the Porsche supervisory board is to study an offer by the state-owned Qatar Investment Authority for a stake in the company along with Volkswagen (VW) stock options owned by Porsche.

VW, meanwhile, has made a counter-offer to buy almost half of the shares in Porsche, in which case Wiedeking, currently chief executive, could be left standing by the side of the road.

Media reports have said Qatar was prepared to pay up to seven billion euros (9.9 billion dollars) for the stakes, while VW\’s bid is estimated to be worth around four billion euros.

Both Porsche and VW, which is holding its own supervisory board meeting the same day in Porsche\’s hometown of Stuttgart, want to create an integrated auto group. The question is who will be behind the wheel.

Qatar and creditor banks are keen meanwhile for Porsche and VW to end their epic boardrooom battle.

Just a few months ago, it looked like Wiedeking might pull off an audacious plan to take over VW after building up a stake of almost 51 percent in Europe\’s biggest car maker.

His strategy backfired against a backdrop of collapsing global car markets and tighter credit conditions however, and Wiedeking now sits in an ejector seat.

After turning Porsche around in the 1990s, he has driven it into one of the biggest dramas in its more than 60-year history.

"I don\’t think we have had a comparable situation in the history of the German economy," German auto expert Ferdinand Dudenhoeffer, reportedly close to Wiedeking, told AFP.

In his gamble to buy VW, Wiedeking used tactics that made Porsche look more like a hedge fund than a car maker and while the good times rolled it made more money through financial transactions than by selling its 911 sports cars and other models.

Complex VW stock options earned Porsche billions as the shares soared in value to more than 1,000 euros at their peak, but on Friday they closed just below 250 euros.

Porsche ended up nine billion euros (12.6 billion dollars) in debt and shelved plans to take its VW stake higher.

An initial target of 75 percent would have given Porsche access to VW\’s coveted cash reserves.

VW and its supervisory board chief Ferdinand Piech have now tried to turn the tables on Porsche with a counter-offer.

Piech, a grandson of Porsche founder Ferdinand Porsche, is also a major Porsche shareholder but in a sign of how heated the debate has grown, Dudenhoeffer said the Porsche family "knows they would destroy the heritage of Ferry Porsche if they agree to Piech\’s plan."

Ferdinand (Ferry) Porsche was the founder\’s son, but auto analysts say his determination to preserve Porsche\’s independence would already be laid low by the sale of a minority blocking stake to Qatar.

Meanwhile, Wiedeking says he has no plans to step down.

"Why should I resign when I have a contract that suits me?" Wiedeking asked reporters Thursday at a ceremony marking the centenary of VW\’s Audi unit and media speculation about his future swirled.

Wiedeking, 56 and an engineer by training, took the top post at Porsche in 1993 when the car maker was in dire straits.

He turned Porsche around, but 16 years later the group, which is owned by the Porsche and Piech families, is once again fighting to remain independent.

Wiedeking viewed Qatar as a saviour willing to invest in Porsche without seeking to take it over. While that might not save his job, he might still save face by getting the company out of one last jam.

Wiedeking, who began building Porsche\’s VW stake in 2005, sparked opposition among unions and directors of the much bigger car maker by threatening worker\’s power and its unique relationship with Lower Saxony, the German state where VW is based.

Lower Saxony owns 20 percent of the shares in VW and by virtue of a special law holds a veto over strategic decisions, which Wiedeking wanted to abolish.

Dudenhoeffer said that if Piech gained control of Porsche, it would become mired in a complex corporate culture that predominates at VW.

"Porsche will be VW-ized," he forecast.

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