Frankfurt - Porsche SE was forced to sell assets worth billions of euros to Qatar in a move to prop up its strained finances, marking a climbdown for a predator that had once sought to dominate Volkswagen.
Qatar Holding LLC will buy a 10% voting stake in Porsche as well as most of its cash-settled options for a stake in VW. The deal gives outsiders a say in Porsche, the debt-saddled family-controlled auto group, for the first time since it started building branded cars in 1948 and comes just after it was forced to sell part of its sportscar business to VW.
Porsche is selling a 42% stake in Porsche AG to VW for about 3.3 billion euros ($4.7 billion). Under Friday's deal, it has also sold a package of cash-settled options on VW shares to Qatar which Porsche said would free up 1 billion euros in cash.
Qatar Holding LLC said in a statement it planned to use the options to acquire 17% of VW's ordinary shares, making it the third largest shareholder in Europe's biggest carmaker after Porsche SE and the German state of Lower Saxony.
Qatar said it would also contribute to Porsche SE's syndicated loan facility and that its total investment across all the components of the deal would top 7 billion euros ($10 billion).
Volkswagen has said it would add the Porsche marque as a 10th brand to its stable that already includes Audi, Bugatti, Bentley, Lamborghini, Skoda, Seat and Scania.
"The journey has been anything but easy. Up until the last couple of days there have been tough and sometimes emotional disagreements. But that time is now behind us," said Volkswagen chief executive Martin Winterkorn, who was also named Porsche CEO late on Thursday.
Lost power struggle
Porsche's capitulation comes after a failed attempt to take over VW and at the end of a prolonged power struggle that claimed the scalp of Porsche chief executive Wendelin Wiedeking.
Porsche had sought to seize control over Volkswagen as a way to gain access to key components and technologies it needs to meet stringent new pollution rules.
But Porsche's takeover attempt backfired after it took on more than 10 billion euros in debt while buying a 50% VW stake and a package of derivatives for control over an additional 20% of VW stock.
It was forced to seek help from Volkswagen, which already supplies components for about a third of all Porsche cars, including bodies of the four-door Cayenne and Panamera models.
In a further step to alleviate Porsche SE's debt, Porsche's controlling families - the Piech and Porsche clans - will sell their automobile trading business, Europe's largest, to VW.
The business, with an enterprise value of 3.55 billion euros, will be sold by 2011, Volkswagen said.
Porsche also aims to raise capital by issuing new ordinary and preferred shares, probably in the first half of 2011.
The Porsche and Piech families will retain a stake of between 35% and 40% in the new combined company, remaining the largest shareholders.