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VW Chairman Signals End to Spending Spree After Porsche, Suzuki Setbacks

September 13, 2011
3 min to read


Volkswagen AG Chairman Ferdinand Piech signaled the carmaker’s ambitions to make further acquisitions may have come to an end following setbacks to a planned merger with Porsche SE and a partnership with Suzuki Motor Corp. in the past week.


“We’re big enough,” Piech said at a VW event in Frankfurt on the eve of the International Motor Show when asked if the carmaker was looking at buying other brands, reported Bloomberg.

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Piech’s cautious answer stands in contrast to statements he made at car shows in recent years, when he said he’d like to buy Fiat SpA’s Alfa Romeo unit and would be interested in expanding the group to 12 brands from the current 10.


Suzuki said yesterday it wants to dissolve a 20-month-old alliance with VW after the German carmaker’s 222.5 billion-yen ($2.9 billion) investment failed to yield a single project and the two fought over control. A merger with Porsche won’t be completed in 2011 as planned, VW said Sept. 8. The Wolfsburg, Germany-based company says it’s committed to both projects.


“At the moment, if they consolidate what they have, they have more than enough to do,” said Jose Asumendi, a London- based analyst with Royal Bank of Scotland. “Once they clear both issues, they’ll actively start looking at other things.”


Volkswagen preferred shares fell as much as 2.10 euros, or 2.1 percent, to 100.10 euros and were down 1 percent as of 10:54 a.m. in Frankfurt trading. The stock has dropped 16 percent this year, valuing the carmaker at 44.9 billion euros.


Suzuki will seek to end the pact with Volkswagen, even if the German automaker wants to maintain it, Chairman Osamu Suzuki said yesterday in Tokyo. VW has talks planned with Suzuki to try and find a resolution for their strained partnership, VW Chief Executive Officer Martin Winterkorn said.

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“We’re keeping to our holding,” Winterkorn told reporters today. “At the same time, we recognize Suzuki’s desire to change things. Volkswagen is the biggest shareholder at Suzuki, why would we want to change that?”


The Japanese automaker, which owns 1.49 percent of Volkswagen, plans to sell its holdings if Volkswagen agrees to end the tie-up, the company said in a statement. The Wolfsburg, Germany-based carmaker owns 19.9 percent of Suzuki, according to Bloomberg data.


Volkswagen Chief Financial Officer Hans Dieter Poetsch told journalists last night that the partnership has not worked for some time.


Poetsch said VW’s intentions of merging with Porsche remain unchanged and that the carmaker didn’t plan to “wait too long” to move forward with the combination.


The two companies put the merger on hold last week due to ongoing lawsuits and investigations against Porsche over accusations the carmaker misled investors during a failed attempt to buy VW. Porsche has repeatedly denied all of the allegations. The two agreed to combine in 2009 after Porsche racked up more than 10 billion euros of debt in the attempt to take over Volkswagen.

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VW is currently investigating the tax implications of exercising an option to buy the 50.1 percent stake in Porsche’s automotive unit that it doesn’t already own, Poetsch said, adding that the process will take a few weeks.


“I now expect VW to make use of the put/call options,” Porsche CEO Matthias Mueller told reporters in Frankfurt today. “This cannot be done until 2012 though.”


Volkswagen also has a number of projects planned with industry partners, production chief Michael Macht said.


“We have a whole series of cooperation projects planned,” Macht said without giving details. “These are development projects, cooperation deals from the production side that are planned and are being planned.”

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