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Ex-Porsche CFO Guilty of Fraud

Ex-Porsche CFO Guilty of Fraud

It looks like things have turned sour at Porsche headquarters in the past few months. At the beginning of this year, a former Porsche dealer in India, Precision Cars, filed a criminal case against Porsche and the courts in Jaipur decided that Porsche CEO, Mattias Müller, and eight other Porsche execs could be arrested and issued warrants for said arrests.

Now, Porsche’s is facing other difficulties. Ex-finance chief, Holger Haerter, has been convicted of fraud after a court in Stuttgart, Germany proved he provided falsified information back in 2009 when Porsche tried to take over Volkswagen AG. The court decided that Haerter offered inaccurate information when he was working on refinancing French bank BNP Paribas’ part of a €10 billion loan ($13 billion). The biggest issue at hand is that this false information affected Volkswagen’s stock price and lead to market manipulation.

Reports say that prosecutors wanted him to serve time in jail, but instead he was fined an unspecified amount. Haerter rejected the charges and argued for an acquittal.

Click past the jump to read more about Volkswagen’s takeover.

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Lotus Parent Company Bringing in a Foreign Partner, Maybe Volkswagen

Lotus Parent Company Bringing in a Foreign Partner, Maybe Volkswagen

It has been a little while since we last checked in on Lotus and its ongoing woes, but we have a small bit of news to pass on. There has been much speculation that DRB-Hicom has been considering offloading some or all of the Proton and Lotus money vacuum to the highest bidder. We all assumed it would be Volkswagen AG, but V-Dub has recently said that it is done with acquisitions, for now.

Reports out of Malaysia say that DRB-Hicom is now working on bringing in a “Foreign partner” to Proton Holdings Bhd, Lotus’s direct parent company. The reports are stating that the talks about this introduction are still in preliminary phases, but the announcement of talks alone is enough to tell us that DRB-Hicom is seriously looking into a way to stop the bleeding via an outside source.

With Volkswagen saying that it has stopped only acquisitions leads us to suspect that it has a small hand in these talks. Volkswagen and DRB-Hicom could easily enter into a nudge-wink type of relationship, much like the VW-Porsche takeover, and reap the benefits without much risk by simply becoming partners then later deciding to “restructure” the partnership.

This would ultimately give VW a clear port of entry into Southeast Asia – something it sorely needs – and give DRB-Hicom some much-needed financial relief and maybe a little boost in sales. Also, with Volkswagen’s reputation of turning around faltering car companies, a Volkswagen-DRB-Hicom-Proton Bdh partnership could ultimately save Lotus from potential extinction.

As we said, the discussions are preliminary and there is no confirmation that the talks even involve VW. It just seems like a perfect fit for every party involved. We’ll keep you updated on this as more information comes out.

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VW CEO Claims Acquisitions Are Over, For Now

VW CEO Claims Acquisitions Are Over, For Now

There has been much speculation in the automotive world about VW looking into buying Proton from DRB-Hicom, and later came the announcement that VW’s labor group would not support additional acquisitions. It looks like - at least the smoke and mirrors make it look like - VW is done buying any more projects for the foreseeable future.

This all comes thanks to a report from Bloomberg, through Handelsblatt, that VW’s CEO, Marin Winterkorn, has said “We have enough to do at the moment in taking our twelve brands to where we want to be” in response to the company possibly buying Proton. He also said “We need to grow in Southeast Asia,” then followed that up with “but that does not mean that we will buy Malaysia’s Proton, like some are speculating.”

In the world of automobile acquisitions, you can always take a CEO’s words with a grain of salt, as they are saying what is true at any given second. At the drop of a hat, that truth can suddenly change, especially if DRB-Hicom decides to offer up Proton at a bargain price. Add in the fact that VW has been very shady with its business tactics lately – avoiding the tax man and sneaking Ducati under Lamborghini’s umbrella to help it meet mpg standards – and you can see why we don’t believe a word of what Winterkorn says.

VW will say what it needs to say in order to keep its labor group happy, but ultimately it is in the automobile manufacturing game to make money. If Proton and/or Lotus are seen as potential profit, VW will tell the labor group to suck it up, as they ink a deal for the Malaysian automotive group.

We’ll keep a close eye on this whole situation and see if VW stays true to it word or reverses ship if Proton falls in its lap.

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Correction: Audi Does NOT Own Ducati, Lamborghini Does

Correction: Audi Does NOT Own Ducati, Lamborghini Does

Okay, for ease of understanding we always just place Lamborghini under Volkswagen AG’s umbrella, but in reality, VW owns 99 percent of Audi AG who in turn owns Lamborghini... got it? In a third party, back-door kinda way, yes, VW does own Lamborghini... sort of. So earlier in the year, we mentioned that Audi had secured the Italian motorcycle builder, Ducati, for about $1 billion.

According to Audi’s financial report, it is not the owner of Ducati. How in the world does that kind of error slip through the cracks, right? Well, apparently, Audi follows the same school of thought as its parent company, Volkswagen AG, and tries to push the bounds of legality to get things done, a la Porsche getting a share of VW to exempt VW from paying taxes on the buyout.

Instead of Audi buying Ducati, Lamborghini actually bought it. This does two things for VW, Audi, and Lamborghini. First, it allows it to retain its Italian roots and secondly, it helps push Lamborghini’s overall fuel economy and emissions closer to the European standards that have plagued it in recent years.

So VW has found a way to slither its way through the EU rulebook and find a way around a very important law. Touché, VW, we bow to your supreme rule-bending abilities and the way you do it without us even noticing sometimes.

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The VW and Porsche "Corporate Restructuring" is Officially Official

The VW and Porsche "Corporate Restructuring" is Officially Official

Finally! After a long and drawn out process, the corporate restructuring that brings full control of Porsche’s automotive side under Volkswagen’s control is approved and official. The deal sent 4.49 billion Euros and one voting share of VW stock from VW and Porsche SE to Porsche AG, the latter item being simply a concession to avoid paying a load of taxes and was left out of VW’s press release.

This officially gives Volkswagen AG 100 percent holdings in Porsche and effectively gives VW the ability to do whatever it wants with the famed sports car builder. We have already alluded to the possibility of VW overriding Porsche’s CEO and continuing on with the “Baby Boxster” project that gained notoriety lately. That possibility was given more solid ground with a statement released by VW CEO, Martin Winterkorn.

Winterkorn was quoted saying “The path is now finally clear for a bright future together. Even closer cooperation will enable us to significantly strengthen Volkswagen and Porsche, and further expand the group‘s product portfolio with fascinating new vehicles.”

You see, it is that last section about bringing new models that really drives home the possibility that VW may be about to force Porsche to build a lesser-priced version of the Boxster. We see that as making perfect business sense because if Porsche buyers can accept a sedan and a pair of SUVs, why can’t they accept a lower-priced Boxster?

Either way, congrats to both sides and we are glad to finally see this issue laid to rest.

Click past the jump to read the full press release.

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Suzuki and Volkswagen in Legal Battle to end Partnership

Suzuki and Volkswagen in Legal Battle to end Partnership

For the better part of the last decade, Volkswagen Automotive Group has been snagging up various automakers and auto groups in an attempt to build an empire that would likely make Darth Vader cower in fear. It looks like one of VW’s Stormtroopers is turning its back on the “Dark Side,” as Suzuki, a company that VW bought some $2.1 billion worth of shares in 2009, is taking VW to court in an attempt to force VW to return the 19.9 percent of Suzuki stock that it owns.

The issues that run between the two are your typical automotive wah-fest, as Suzuki is boo-hooing over the fact that VW did not share enough technical information with Suzuki, which was a stipulation of the stock sale. VW, on the other hand, is crying foul because Suzuki opted to source a small-displacement engine from Fiat instead of VW. Oddly enough, VW is fighting Suzuki to keep its shares, while Suzuki has filed suit against VW in a London court to force VW to sell its shares back.

Another odd turn of events is the fact that Suzuki is willing to pay market value to VW for said shares, giving Volkswagen a cool $300K to $400K in profit.

Overall, this is a very strange turn of events, as we are not quite sure exactly what in the world VW would want with the Suzuki brand under its umbrella. The brand has been really struggling in the last decade and looks to eventually go the Isuzu route and pull out of the American market altogether. Then again, VW has been apt for turning around struggling car companies, a la Audi.

We’ll keep you posted on any new happenings in this legal battle.

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Volkswagen's Takeover of Porsche is Complete

Volkswagen’s Takeover of Porsche is Complete

For the most part, business deals are massaged with care and come together with relative ease and little drama. We guess the Germans must do things a little differently, as the VW takeover of Porsche was anything but easy and drama-free. In fact, it was closer to the exact opposite.

Seven years ago, Porsche was sitting pretty and decided it wanted to expand, but bit off way more than it could chew when it tried to buy out Volkswagen. This attempted takeover split Porsche’s ownership group and eventually resulted in Porsche falling into extreme debt and abandoning the takeover plan.

In 2009, the script flipped and VW ended up indirectly owning 49.9 percent of Porsche and striking an agreement in 2009 to buy up the remaining 50.1 percent. That agreement turned south when VW realized that the resulting tax payments for the purchase were its responsibility. Well, after some nifty dance steps with the taxman, VW managed to avoid paying taxes on the purchase and the deal was all but complete.

Now we can finally announce that the deal is 100 percent complete, and VW is now the sole owner of Porsche AG. The total purchase deal is going to send €4.46 billion ($5.59 billion) and a single common share of VW stock to Porsche SE. Volkswagen plans to integrate Porsche into its automotive group on August 1, 2012. Porsche SE will also receive an additional €320 million ($401 million) in lost dividend payments and net synergies, due to the rapid integration of Porsche AG into VW’s ownership group – basically VW is paying off Porsche SE to gain quicker control of its automotive group.

With this, VW’s impressive automotive group grows yet again. We are starting to wonder how big Volkswagen AG can really get before it’s too big for its own good.

Click past the jump to read the full and complicated presser from VW.

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Volkswagen and Porsche Successfully Perform the Avoid-the-Taxman Dance

Volkswagen and Porsche Successfully Perform the Avoid-the-Taxman Dance

We all know that when you buy or sell anything of significant worth, the gummament is not too far away with its hand out asking for its share. It doesn’t care which side it comes from, just as long as someone pays “The Man.” Well, when VW AG decided it was time to buyout the remaining 50.1 percent of Porsche and get its former ownership group completely out of the picture, we were talking billions of Euros, €4.5 billion to be exact.

Well, even in Germany, “The Man,” or better yet “Der Mann,” is there in the form of the Baden-Württemberg Finance Ministry asking for his cut of the deal, which would total about €1.5 billion ($1.9 million). This was just about the breaking point of the entire deal, as a part of the buyout was that VW pays the tax.

After five months of massaging the numbers, looking at the laws, and manipulating things in ways that would make a business ethics major cringe, VW and Porsche are about to pull off this deal 100 percent tax free. How they pulled this off was simple enough… The only real sticking point was the fact that VW had to find out how to manipulate the deal into a corporate restructuring, as opposed to a sale.

To achieve a restructuring classification instead of a buy-sell classification, VW gave Porsche the €4.5 billion buying price, but included in that price a single voting share of VW stock… Yeah, that’s it. One little piece of paper that says “I can vote on important issues” saved VW €1.5 billion. Gotta love those tax attorneys.

The deal has yet to be approved by state authorities, but sans any omissions or errors, this looks to be a final deal that gives VW the title to Porsche, instead of just a rental contract.

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