Volkswagen in Advanced Talks Over Porsche IPO
Move could help the car maker raise the cash needed for investment in electric vehicles
BERLIN— Volkswagen AG VOW +4.63% and the heirs of Beetle designer Ferdinand Porsche, the company’s largest shareholder, said on Tuesday they are in advanced talks that could lead to the initial public offering of the iconic Porsche AG sports-car maker.
The German auto maker said it had worked out a framework agreement with Porsche SE that still requires formal approval of both companies and their supervisory boards. VW shares jumped nearly 9% on the news as trading opened on the Frankfurt stock exchange, and were trading at around €188.14 by midmorning, equivalent to $212.81.
A listing would provide VW with fresh cash to fund its aggressive push into electric vehicles, the development of new technology such as self-driving cars and the creation of a new business building batteries for its EVs. The discussions highlight how auto makers are scrambling to secure the capital to finance the auto industry’s most far-reaching transformation in a century.
The announcement comes after more than a year of speculation and intense discussion among VW core shareholders that include Porsche Automobil Holding SE, the fund owned by the Porsche and Piech families, the state of Lower Saxony, which controls around 20% of VW and has special rights under Germany’s “VW Law,” and the influential IG Metall labor union which holds half the seats on VW’s board of directors.
Porsche SE confirmed the talks and said it could purchase Porsche AG shares in the event of an IPO. People close to the family have said as recently as December that it was considering selling some of its 53% stake in VW to take a large share of Porsche, which the family ceded to VW after Porsche’s failed attempt to take over VW in 2008.
Volkswagen is investing in electric vehicles more than other legacy car makers in the U.S. WSJ goes inside an engine factory that is being transformed into a battery plant as the German giant looks to change its image and become a rival to Tesla. Photo illustration: George Downs
Porsche is a major driver of VW profits and one of its most recognized brands. The maker of the 911 sports car and the Taycan all-electric sports sedan contributes a large share of its profit to the VW group, which also includes the namesake VW brand, Audi, Bentley, Lamborghini and others.
Although its sales of 301,915 vehicles last year are dwarfed by VW’s mainstream mass-market brands, analysts estimate that Porsche’s electric car business alone could be worth nearly half of the value of the entire VW group, which has a market capitalization of €108.61 billion.