It certainly had all the drama of a biblical battle, with family members pitted against one another, but in this case, David was the one that picked the fight. And Goliath won.
Months after the sports car manufacturer, Porsche, launched a costly campaign to gain control of its German rival, Volkswagen, the tables have turned. VW will now take over the smaller carmaker, reportedly for a price of $11.3 billion. Porsche will join a long list of prestige marques VW has acquired in recent years, including Bentley, Bugatti and Lamborghini, as well as the more mainstream luxury brand Audi.
Wendelin Wiedeking, the hard-charging manager who transformed Porsche into one of the world’s most profitable auto companies, will bail out as its CEO, but he’ll be covered by a golden parachute estimated to be worth $70 million.
Under Wiedeking, Porsche attempted to mount what has been described as one of the most audacious takeover attempts in automotive history, running up debt of almost $20 billion by some accounts in the process. During the last several years, it built up a 51% stake in Volkswagen, and more recently made it clear it wanted to take over the larger maker. And under more normal circumstances, that would have given it control of the bigger company. But when it comes to VW, one of Germany’s largest employers, things aren’t always done by the normal rules.
A special law was put in place to protect VW from unwarranted advances and to protect the state of Lower Saxony, where the carmaker is based, and which holds a so-called golden share in Volkswagen. That effectively blocked a takeover if VW refused to acquiesce.