VW in advanced talks over listing Porsche brand

Volkswagen is exploring the option of floating its highly-profitable Porsche brand, the carmaker confirmed, in a highly-anticipated move that could result in one of the largest public offerings in Germany for several years.

In a statement on Tuesday morning, the world’s second-largest carmaker by volume said it was in “advanced discussions” with its majority shareholder, the family-owned Porsche SE, regarding a potential IPO of the Porsche brand.

“For this purpose, Volkswagen AG and Porsche Automobil Holding SE negotiated a Framework Agreement which should form the basis for further steps in the preparation of a potential IPO,” the company said.

But it urged that a final decision had not yet been taken and would be subject to approval by Volkswagen group’s management and supervisory boards. A VW supervisory board meeting is due to take place next month.

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Volkswagen shares jumped 9 per cent to €190.14 by mid-morning in Frankfurt following the announcement. Shares in Porsche SE, which is also listed although the vast bulk of the shares are family-owned, rose 9 per cent to €88.88.

Analysts have estimated that using multiples applied to peers such as Ferrari, Porsche would be valued by the market at up to €200 billion, far exceeding VW’s current market capitalisation, which stands at roughly €110 billion. A partial IPO was described by one VW source as a “win-win”.

Takeover

Porsche was first taken into Volkswagen in 2012, in a reverse takeover after the storied sports brand failed to buy the Wolfsburg-based company.

Along with Audi, the marque has since been one of the main profit drivers for the Volkswagen group, and has made further inroads into the electric market with its successful Taycan model, which now outsells the 911.

Pressure has been mounting for VW to release some of the value in Porsche in order to fund its own electrification efforts.

Volkswagen has already committed to spend €52 billion on emissions-free models, but executives told the Financial Times the company would need further funding for battery factories and needed to secure the necessary materials.

Porsche SE, the investment vehicle of the Porsche-Piech families that owns 53.3 per cent of VW shares with voting rights, also confirmed that it might buy ordinary shares in Porsche AG as part of a potential IPO.

The statement follows speculation that Porsche SE would sell down some of its stake in Volkswagen to fund such an acquisition. Such a move would loosen the hold that Porsche SE and the state of Lower Saxony - VW’s second-largest shareholder - have on decisions at the company. - Copyright The Financial Times Limited 2022