Volkswagen and its top shareholder have drawn up a preliminary agreement to list Porsche, paving the way for a deal that investors hope will unlock value from the luxury car brand and could be one of the world’s largest stock market debuts.
Analysts estimate Porsche AG could be valued at up to $102 billion in an initial public offering, compared with Volkswagen’s current market value of around 116 billion euros.
A listing could also shift the balance of power at Europe’s top carmaker, which was carefully crafted in the wake of a failed takeover of Volkswagen by Porsche in 2009, resulting in Volkswagen acquiring the luxury brand.
At the time, the Porsche and Piech families became Volkswagen’s most influential investors via their holding company Porsche SE, which holds 31.4% in Volkswagen and 53% of the carmaker’s voting rights.
Volkswagen could issue an equal number of Porsche AG ordinary and preference shares in the potential IPO and may pay a special dividend to its owners to drum up support, two people familiar with the matter told Reuters.
Ordinary shares confer voting rights and Porsche SE said it could buy such shares in any Porsche AG listing.
The sources said Volkswagen may seek to list 25% of Porsche AG if the IPO goes ahead.
Shares in Volkswagen and Porsche SE jumped as much as 10.2 and 15.2%, respectively, with investors hoping a listing could boost the Porsche brand’s value and give Volkswagen extra financial clout for the shift to electric vehicles.
Sources previously said the Porsche and Piech families may decide to reduce their stake in Volkswagen to buy into an IPO of Porsche AG.
Such a move would loosen the families’ grip on the German group in favor of direct ownership of the sports car brand founded by their ancestor Ferdinand Porsche in 1931.
Volkswagen and Porsche SE declined to comment on details of a potential listing, but the carmaker said a final decision had not been taken and any deal must be approved by management and supervisory boards.
One of the sources said Volkswagen CEO Herbert Diess presented a basic outline of the IPO plans to representatives of the supervisory board earlier this week following discussions on the matter over last weekend.
A supervisory board meeting originally scheduled for Tuesday to discuss the plans was canceled as too many questions remain unresolved, the person said.
Volkswagen said it was considering hiving off its profitable Porsche division into a separate company with its own stock listing. The transaction would help the automaker raise money to invest in electric vehicles while also potentially returning more control of the high-performance carmaker to descendants of its founder.
The transaction would require approval by Volkswagen’s supervisory board and could be vetoed by the State of Lower Saxony, which has two seats on the 20-person board, and Volkswagen workers, who have 10 seats. The transaction would generate cash that Volkswagen could use to manage a costly transition to electric vehicles, but it would also reduce the company’s share of Porsche’s profits. Volkswagen is likely to retain a stake in Porsche, though its exact size is not yet clear.
The holding company, which owns 51 percent of Volkswagen’s voting shares, said in a statement that it might acquire shares in an independent Porsche carmaker as part of the transaction. If so, the family could trade shares in Volkswagen, one of the world’s largest carmakers, for a greater share of Porsche, which supplies a third of the parent company’s profits.