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Abu Dhabi, UAESunday 23 September 2018

VW's Ducati sale stuck on starting line

Motorcycle unit and other assets 'not up for grabs'

Opponents do not want to see VW offload Ducati. Dado Ruvic/ Reuters
Opponents do not want to see VW offload Ducati. Dado Ruvic/ Reuters

Volkswagen's planned sale of motorcycle brand Ducati and transmissions maker Renk has currently no majority backing on the carmaker's supervisory board, with opponents to asset sales feeling invigorated by the group's strong results.

Europe's largest automaker has tasked banks to evaluate options for Ducati and Renk including divesting the two divisions as it aims to streamline operations to help fund a post-dieselgate strategic overhaul.

Volkswagen (VW) has been reviewing its portfolio of assets and brands since announcing in June 2016 a multibillion-euro shift to electric cars and new mobility services as part of its so-called Strategy 2025.

But VW's labour leaders, occupying half the seats on the 20-member supervisory board which decides on asset sales, resist a sale of Ducati and Renk without compelling financial reasons.

"The employee representatives on Volkswagen's supervisory board will neither approve a sale of Ducati, nor one of Renk or MAN Diesel & Turbo," a spokesman for VW group's works council said.

"Everyone who can read the VW half-year results should know: we don't need money and our subsidiaries are not up for grabs by bargain hunters."

Six-month operating profit at VW group jumped 19 per cent to €8.9 billion (Dh38.43bn), the car maker said, as cost cuts and R&D improvements at the core namesake brand earned VW a respite from the billions of euros in costs for fines, vehicle refits and compensation related to its dieselgate scandal.

Although Ducati is owned by VW's luxury brand Audi, the VW group's supervisory board has to approve a possible sale. Audi declined comment.

The billionaire Porsche and Piech families, controlling 52 per cent of voting shares in VW and holding four supervisory board seats, do not support selling Ducati or Renk, two sources at VW group said.

A spokesman for Porsche, the family's holding company, declined comment.

With 20 percent of voting rights in VW, Lower Saxony, where the carmaker employs more than 100,000 staff at six plants, can veto decisions such as factory closures.

Holding two board seats, Lower Saxony traditionally teams up with VW's worker representatives for the sake of protecting jobs and projects. A spokeswoman declined comment when asked whether the state government would back a sale of Ducati or other assets.

"The management board has not even asked the supervisory board of Volkswagen where such sales have to be ratified for its approval," the works council spokesman said. "Therefore we advise all supposedly interested parties: Save your time to check any books. A sale will not happen."

Five bidders are shortlisted to buy Ducati, including Italy's Benetton family, with offers received valuing the brand at €1.3bn to €1.5bn, a source said.

A third source at VW said that given strong union opposition, VW is now reviewing its plan to sell Ducati as it does mnot want to risk working with labuor on implementing a hard-fought turnaround plan for the VW brand, seen as crucial by investors.

The VW finance chief Frank Witter declined any comment on "speculation" surrounding VW's asset sales plans.

* Reuters

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