x Abu Dhabi, UAEMonday 24 July 2017

Porsche set to sell stake to QIA

Qatar Investment Authority in talks about the Gulf state taking a stake in the German sports car maker as it seeks to merge with Volkswagen.

Porsche is in merger talks which could see Porsche sit alongside Volkswagen brands that include Skoda, Bentley and Audi.
Porsche is in merger talks which could see Porsche sit alongside Volkswagen brands that include Skoda, Bentley and Audi.

Porsche is in exclusive talks with the Qatar Investment Authority (QIA) about the Gulf state taking a stake in the German sports car maker as it seeks to merge with Volkswagen. A cash injection could help Porsche assert more control in its merger bid with Volkswagen, which has been marred by a family feud. "I can confirm that we are talking and that the talks are taking place in a good atmosphere," said Albrecht Bamler, a spokesman for Porsche. Mr Bamler said the discussions were exclusive but declined to comment on the possible size of a stake or when a deal might be reached. Late last month the Porsche and Piech families, who control 100 per cent of the company's voting stock, agreed to seek an outside investor. Porsche was forced to suspend its bid to take full control of Volkswagen, Europe's biggest car maker, after failing to raise sufficient funds. The pair are now in tense merger talks that have suffered a series of setbacks amid a closely watched feud between the two families. The two families have close ties: Ferdinand Piech, 72, is Volkswagen's chairman, while his cousin, Wolfgang Porsche, is the chairman of Porsche. The merger talks suffered a disruption when Mr Piech challenged Porsche's financial position. A merger would create the world's biggest car maker and see the Porsche brand sit alongside the Volkswagen-owned Skoda, Bentley and Audi brands. An injection of funds from Qatar could strengthen Porsche's hand in the talks as it strains to service the ?9 billion (Dh45.88bn) in debt it has accumulated while building its stake in Volkswagen. Earlier this year it managed to roll over its ?10bn credit line used to finance the purchase of Volkswagen shares. Last month it received a short-term loan from Volkswagen. Porsche is also seeking a ?1.75bn loan from the German government as part of an economic stimulus programme but a decision on the funding has not been made. Global car makers have courted Gulf investors because of an industry-wide slump that has forced some manufacturers to cut jobs and halt production. Aabar Investments, a unit of Abu Dhabi's International Petroleum Investment Company, bought 9.1 per cent of Daimler in March, becoming the biggest shareholder in the maker of Mercedes-Benz cars. Kuwait also has a 6.9 per cent stake in Daimler. London's Financial Times Tuesday reported that QIA could take a stake of up to 25 per cent in Porsche, citing informed sources. Should the talks succeed, the deal could be announced within weeks, it said. At Porsche's current market capitalisation of about ?8.2bn, a 25 per cent stake would be worth more than ?2bn. Qatar may also consider buying call options that could be converted into between 20 and 24 per cent of Volkswagen. Porsche still owns those options but has not yet converted them. QIA could not be reached for comment. uharnischfeger@thenational.ae