free counter
World

Breakingviews

The new Porsche 911 Carrera 4S is displayed at the 89th Geneva International Motor Show in Geneva, Switzerland, March 5, 2019. REUTERS/Pierre Albouy

Register now for FREE unlimited access to Reuters.com

LONDON, Sept 6 (Reuters Breakingviews) – It’s a hairy time for any carmaker to go public. Share prices are crumbling as Russia threatens to cut off gas to Europe. Despite good arguments not to, Volkswagen (VOWG_p.DE) announced on Monday its intention to list luxury brand Porsche, estimated at between 60 billion euros and 85 billion euros by analysts.

The timing has been made trickier by VW’s governance tangles. In July Chief Executive Herbert Diess was replaced by Porsche CEO Oliver Blume, at the behest of VW’s biggest shareholder, the Porsche and Piëch families. The risk is his status as CEO of both VW and Porsche creates conflicts. Blume can recuse himself from any votes with unresolved conflicts, but that still looks messy.

VW’s confidence in Porsche is deserved. It grew year-on-year revenue by 8.5% in the first half despite the crisis, and is far ahead in its transition to electric vehicles. Besides, excessively focusing on value may miss the point. The deal will allow the Porsche and Piëch clans, who have over half the voting rights in VW, to get more direct control of Porsche by snapping up just over 25% of its voting shares. Those will be issued at a skinny 7.5% premium to the non-voting ones in the IPO. That means even if the listing price disappoints, some shareholders will still get what they want. (By Neil Unmack)

Register now for FREE unlimited access to Reuters.com

Follow @Breakingviews on Twitter

Capital Calls – More concise insights on global finance:

UK property tie-up is sign of shaky foundations

UBS fintech U-turn casts doubt on growth plan

Lululemon stretches inventory logic read more

Starbucks CEO rewards trumps even generous Reckitt read more

Premier League spending spree is a step backwards read more

Register now for FREE unlimited access to Reuters.com

Editing by George Hay and Oliver Taslic

Our Standards: The Thomson Reuters Trust Principles.

Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

Read More

Related Articles

Leave a Reply

Your email address will not be published.

Back to top button

Adblock Detected

Please consider supporting us by disabling your ad blocker