Can Porsche do it, where BMW failed?

Porsche is to become Europe’s largest car and truck manufacturer after it increases its stake in Volkswagen above 30 per cent on Monday and prepares to launch a low-ball €35bn ($47bn) takeover offer. The sports car manufacturer will raise its stake in VW by 3.7 per cent to 31 per cent, triggering a mandatory takeover offer. VW sells 60 times more cars than Porsche and has sales of €100bn against its smaller rival’s €6bn.

Porsche’s investment in VW now totals about €5bn but gives it control over an empire ranging from small cars such as the VW Golf and Beetle, through the Skoda and Seat marques, to luxury brands such as Bentley, Bugatti and Lamborghini. It also gives Porsche a say over the creation of what would be Europe’s largest truckmaker as VW is the biggest shareholder in both Germany’s MAN and Sweden’s Scania, who should enter friendly merger talks later this year.

The move underlines the control of Ferdinand Piëch, who is simultaneously VW’s supervisory board chairman and a controlling shareholder in Porsche. He is also the grandson of Ferdinand Porsche, who created the VW Beetle and founded Porsche.

But it also takes Porsche on a different tack to the rest of the German car industry after BMW failed in its foray into the mass-market by selling Rover and with DaimlerChrysler in the middle of potentially separating itself from its ill-fated investment in the volume US manufacturer, Chrysler.

Porsche has secured €35bn in financing for the takeover. But officials insisted its low-ball offer would mean it was unlikely to pick up many shares. Instead, it would allow Porsche to increase its stake in the future without having to launch another mandatory offer, or to inform regulators until it owned more than 50 per cent of the shares.

In spite of Porsche talking down its own takeover offer, it is still a relatively generous price, given that VW’s share price has surged in recent months on speculation of a Porsche takeover. Porsche’s intentions to VW were made clear by a restructuring of its own business, which will see the creation of a new holding company above the sports carmaker’s operational business. This will be a European Company, or Societas Europaea, allowing Porsche to remain independent and keep a small superviso