Porsche Planning To Sell Volkswagen Shares To Qatar

June 25, 2009

The bewildering Porsche/Volkswagen saga continues to evolve, and, we're sorry to say, it's become slightly more confusing today.

To recap: Porsche owns a majority stake in VW, but only a slim one--just under 51%. Porsche also possesses options that allow it to buy additional stock in Volkswagen, and the company was prepared to exercise those options in October of last year. Unfortunately, that's when the bottom fell out of the global economy, and Porsche found its own car brand struggling while Volkswagen zipped along fairly well, thanks. Humbled, Porsche spoke briefly about a merger with VW, but that didn't pan out too well, so now the company has dusted itself off and renewed its intention to take over the world's third largest automaker by any means necessary.

Earlier this week: On Monday, we mentioned that Daimler is looking to purchase a chunk of Porsche. Although no details about the arrangement were made public, we know that Daimler received a hefty, €2 billion (around $2.8 billion) settlement from a recent stock trade with investors from Abu Dhabi. That money could help Porsche hobble through this rough patch and potentially go toward Porsche's conversion of those aforementioned stock options in VW.

Today: Now comes news that Porsche is planning to sell a sizable portion of those VW options to the nation of Qatar. (Qatar had been more interested in Porsche at first, but given Volkswagen's current profitability...well, let's just say the Gulf state has a wandering eye.) If the deal goes through, it would give Qatar around 20% of VW's voting shares, which would put Qatar on roughly equal footing with Volkwagen's second biggest stakeholder, the state of Lower Saxony.

How this will all play out is anyone's guess--especially since so many of the details are shrouded in secrecy. (Much like the earlier announcement of the Daimler/Porsche affair, representatives from Porsche and VW have both declined to comment on the Qatar deal.) If the Porsche's sale of options to Qatar goes through, it would become mathematically impossible for Porsche to overtake VW via its initial plan to buy up 75% of its stock. However, with Qatar voting on its side, Porsche could finally force that merger with Volkswagen it's been hoping to pull off since the spring. Volkswagen can't be too happy about these developments, but at this point, we're not sure the company has many options. Stay tuned...

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