Volkswagen’s governance is like a Rubik’s cube. The 135 billion euro carmaker’s corporate structure counts the Porsche-Piech family, VW bosses and public stakeholders like the German state of Lower Saxony as key parties, and improving the lot of one can mess things up for others. A potential listing of the luxury Porsche brand could help clean up the situation.
VW bosses have for a while mulled some sort of conscious uncoupling with Porsche AG, acquired a decade ago after the family’s holding company, Porsche Automobil Holding, got into difficulties. Given that the luxury car brand could be worth 150 billion euros, when valued in line with Ferrari’s 33 times EBIT to enterprise value multiple, a spinoff or listing could unlock value. Yet it also raises thorny questions over how such a move would impact the Porsche-Piech family, which holds 31% of VW and 53% of the voting rights, and Lower Saxony, which holds a 12% economic stake.
The family’s latest gambit, reported by Reuters on Monday, is that they would be prepared to acquire a direct stake in a spun-out Porsche AG. It’s not clear how they intend to do this, but there are several ways a spinoff or listing might happen.
Volkswagen boss Herbert Diess could start by listing a small stake in Porsche, say 25%. That could raise resources for VW’s electric vehicle transition, but given that the group is forecast to have 31 billion euros of net cash at year-end, that’s a sideshow. The real benefit for VW shareholders would come from a full demerger, in which each of the German carmaker’s investors receive a new Porsche share.
That might also appeal more to the Porsche-Piech family members. With a market price for Porsche AG stock, they could swap some of their 31% VW holding for some or all of Lower Saxony’s stake in Porsche AG. For no cash outlay, the family would end up with a bigger chunk of Porsche, and limit their dealings with other public sector shareholders, as was the case before the VW merger.
The snag is that such a deal would leave Diess more beholden to public sector investors. But unions already call the shots on VW strategy anyway, because they and Lower Saxony have 12 of the carmaker’s 20 supervisory board seats. A deal is there to be done – just don’t bet on all sides’ ability to strike one.