Posted by: David Kiley on July 17, 2009
Embattled Porsche SE CEO Wendelin Wiedeking [see Q&A with Wiedeking in Bssinessweek from 2007]may be moving closer to ending his 16-year run as head of the iconic German automaker, according to German press reports on Friday.
Wiedeking, together with Porsche SE supervisory board chairman Wolfgang Porsche, has been trying to execute a takeover of the much larger Volkswagen AG. But the derivative scheme Porsche was using to finance the move backfired on the company last Fall when the global credit markets collapsed, leaving Porsche with more than $12 billion of debt it can’t afford to service.
The CEO, the highest paid in Europe, has been trying to line up a $7 billion investment in Porsche from Persian Gulf State of Qatar to buttress the company’s balance sheet, and allow it to complete a takeover of VW. Porsche currently owns 51% of VW. But the transaction would have to be approved, ironically, by Ferdinand Piech, supervisory board chairman of VW and a controlling shareholder in Porsche SE. Piech is believed to not favor the Qatar investment, and is instead pushing a plan for VW AG to absorb Porsche into its auto group that also includes Audi, Bentley, Seat, Skoda and Lamborghini.
VW has made an offer of about $5.6 billion for nearly half of the shares in Porsche, saying that a sale would allow it to trim its debt of around nine billion euros (12.6 billion dollars).
Porsche executives have countered that VW is not offering enough money for half of the automaker’s shares. That offer would have to approved by the Porsche family led by Wolfgang Porsche. Porsche and Piech are cousins, and both are grandsons of Porsche founder Ferdinand Porsche. The families control 100% of Porsche’s voting shares.
Rumors have followed Wiedeking for months that he would not survive the outcome of the debacle between VW and Porsche. On Friday, an online report by Der Spiegel magazine, which did not identify its sources, said the Porsche and Piech families that control Porsche SE would name production chief Michael Macht as new CEO of its core sports-car operations.
A Porsche spokesman said: Wiedeking is and remains the boss” of the company, while noting that Porsche would hold an extraordinary meeting of its supervisory board next Thursday. Both Porsche and Volkswagen have announced they will hold extraordinary board meetings that day in Porsche’s home town of Stuttgart, raising speculation that a deal may be on the horizon.
Wiedeking on Thursday personally denied rumors that he would resign as chief executive, saying he planned to complete his contract which expires in 2012. On Bloomberg TV, Wiedeking said, “I’m the chief executive officer,” Wiedeking said in Ingolstadt, Germany, attending a 100th anniversary of Audi AG. “I bear responsibility for this company and I’m feeling happy as a cat in that role.”
Wiedeking has long been very popular with German labor because of his insistence on keeping jobs in Germany rather than manufacturing Porsche’s in other countries. The Works Council of Porsche gave Wiedeking its support on Wednesday. Chairman of the Porsche AG Group Works Council, Uwe Hück, backed Wiedeking as well as the idea of Porsche remaining independent.