In the first step, Porsche Automobil Holding SE plans to sell most of its options on Volkswagen shares to Qatar. Successful completion of these talks, which are already at an advanced stage, would be a key step on the way to becoming an integrated automotive group. Exercising the options would result in Qatar becoming Volkswagen's third anchor shareholder.
At the same time, Porsche will seek the support of its lending banks for the overall concept that has now been agreed to further safeguard its financial stability, and will negotiate a new financing structure with them.
Provided that these talks are successful, and if Qatar acquires the portfolio of options, Volkswagen will then take a 42.0 percent stake in Porsche AG by the end of 2009. Based on the comprehensive due diligence and valuation process that has been performed a value of EUR 12.4 billion has been determined for the company as a whole, including the expected synergy effects. On this basis, and after factoring in Porsche's debt, Volkswagen is expected to pay approximately up to EUR 3.3 billion for the 42.0 percent stake.
To finance its investment in Porsche AG and safeguard its rating, Volkswagen is planning a capital increase in the first six months of 2010 by issuing new preferred shares. The Supervisory Board will address the issue and resolve the details in the near future. Such a capital increase requires the approval of the shareholders, which is expected to be obtained at an Extraordinary General Meeting by the end of this year.
Another component of the overall concept is that the family shareholders will sell to Volkswagen the operating business of the separately owned Porsche Holding Salzburg. An enterprise value of EUR 3.55 billion has been determined for Europe's largest automobile trade company, with unit sales of most recently 474,000 vehicles. The trading business can be sold starting in 2011. In this case too, however, Porsche Holding Salzburg will retain its current structure and responsibilities as an organizational unit, and family members will remain represented in the company's governing bodies.
The family shareholders will use the bulk of the proceeds from the sale of the trading business of Porsche Holding Salzburg to increase the ordinary share capital of Porsche SE. This capital increase is designed to further improve Porsche SE's financial situation and will happen before the intended merger with Volkswagen. The increase in the ordinary share capital will be accompanied by the issuance of new Porsche SE preferred shares.
Following this, a financially stable Porsche SE will be merged with Volkswagen - the final step in the combination of the two companies. The merger requires the approval of the general meetings of both companies. Completion is expected in the course of 2011.
The precise shareholder interests following a merger are not yet final and depend on the volume of any capital increases, the cash flow and liquidity or debt situation of the two companies, and on the merger ratio for Volkswagen and Porsche SE established at the time of the merger. However, the Porsche and Piech family shareholders will remain the largest shareholders at Volkswagen, and the State of Lower Saxony will continue to be the second-largest shareholder in the Volkswagen Group in the future.
According to the comprehensive agreement, the status of Lower Saxony will in future be explicitly anchored in Volkswagen's articles of association. It is envisaged that Lower Saxony will be entitled to appoint two members of the Supervisory Board. The existing blocking minority rule will be reaffirmed - at Volkswagen, key decisions by the Annual General Meeting require a qualified majority of more than 80 percent of the share capital represented at the AGM.
There are also plans to offer a substantial investment opportunity to the worldwide employees of the integrated automotive group. The employee participation model will be implemented via an employee foundation to be established by the group works councils of Volkswagen AG and Porsche AG.