VW threat on Magna’s Opel bid is like blackmail, union boss says

FRANKFURT (Reuters) — Opel labor leader Klaus Franz branded Volkswagen‘s threat to pull business from supplier Magna International if it acquires Opel as “tantamount to blackmail.”
Magna is in a close race with Belgian finance group RHJ International to gain majority control of General Motors Co.’s Opel unit, which is VW’s closest German rival.VW threat on Magna’s Opel bid is like blackmail, union boss says

VW CEO Martin Winterkorn said on Friday that VW viewed Magna’s Opel bid with suspicion and would reconsider doing business on complex components with the supplier.

Franz fired back at Winterkorn, hoping to quash a harmful debate in its infancy regarding whether a supplier like Magna should compete directly with its customers by acquiring a carmaker.

“The threat not to award Magna with contracts is tantamount to blackmail,” Franz said.

“Whoever says a rescue of Opel through Magna poses a competitive disadvantage is hoping for the downfall of Opel in order to gain an edge for himself and reduce his own overcapacities at the cost of Opel,” he said.

Franz said VW has enjoyed state support for decades because VW’s home state of Lower Saxony has a 20 percent stake in the Wolfsburg-based carmaker.

Magna has made repeated assurances to cleanly separate its supplier operations with any automotive operations.

Ford Motor Co, whose German-based European unit is also a close rival to Opel, is not worried about Magna winning control of Opel.

“We’ve had discussions with Magna about ensuring the appropriate safeguards for our intellectual property,” Ford Motor Co. Chief Financial Officer Lewis Booth said earlier this month. “We’ll work with Magna to make sure we mitigate any ramifications.”

Analysts have been skeptical whether VW really would pull business away from Magna, since VW is the biggest customer of Faurecia, a major European supplier that is majority owned by French carmaker PSA/Peugeot-Citroen.

Magna International’s Magna Steyr unit in Austria manufactures the BMW X3, Mercedes-Benz G class, the Chrysler 300C and the Jeep Commander and Grand Cherokee for three different customers.

It will even expand production in the future to include making the Rapide four-door coupe for Aston Martin and the Boxster/Cayman line for Porsche, indicating that it has successfully managed to convince carmakers that technology developed in tandem does not leak to other carmakers.
VW threat on Magna’s Opel bid is like blackmail, union boss says

VW, Porsche agree on sale terms; new name Auto Union?

HANOVER/STUTTGART (Reuters) — Volkswagen and Porsche have broadly agreed on details for a deal to combine their businesses, two VW supervisory board members said.
The combined entity could eventually be called “Auto Union” and may be led by VW CEO Martin Winterkorn. Winterkorn has given assurances that Porsche would remain an independent brand, just like VW-owned premium carmaker Audi.

Porsche would be the 10th brand in the VW group joining marques such as Bentley, Skoda, Seat and truck maker Scania.

VW is set to buy a stake of up to 49 percent in Porsche AG, the sports car unit of family-owned Porsche Automobil Holding SE. It would be the first step in creating what VW has called an “integrated” automotive group. The integration is expected to be completed by the end of 2011.

“Questions over valuation have been resolved,” one of the board members told Reuters on Wednesday.

The partial sale of Porsche’s sports car business, which analysts have valued at between 8 billion and 11 billion euros, is set to be decided at a VW supervisory board meeting on Thursday.

Porsche SE needs to repair its stretched balance sheet after its failed attempt at a debt-financed buyout of VW, Europe’s largest carmaker.

Porsche, which owns a stake of just above 50 percent in VW voting shares and swap contracts to control another 20 percent VW stake, was forced to abandon its stake-building earlier this year and negotiate a merger instead.
VW, Porsche agree on sale terms; new name Auto Union?

120B euros combined sales

Stuttgart-based Porsche ousted its CEO, Wendelin Wiedeking, in July and is working to pay down a debt load of more than 10 billion euros ($14.13 billion).

The amount VW will pay for Porsche could be adjusted following detailed due diligence, said sources close to VW.

The combined company would generate more than 120 billion euros in pro-forma annual revenue from the sale of nearly 6.4 million vehicles, based on figures from the carmakers’ past fiscal years.

At the same time as the VW-Porsche negotiations, the Gulf state of Qatar is set to buy Porsche’s package of derivatives, which are worth about 5 billion euros, a step designed to alleviate Porsche SE’s debt.

The deal to sell the derivatives, which can be converted into a 17 percent stake in Volkswagen, “is almost home and dry,” a banker familiar with the matter said.

Porsche’s controlling families have already approved plans for a capital increase of at least 5 billion euros, involving ordinary and preferred shares.

Porsche could sell some voting shares to Qatar as part of the capital increase, people familiar with the deal said. It remained unclear whether Qatar would take voting shares in Porsche, in Volkswagen, or in both.

Porsche has said it expected a pretax loss of up to 5 billion euros due to write-downs on the value of Volkswagen stock hedges for the fiscal year ended July 31.

VW’s home state of Lower Saxony is expected to retain its blocking minority stake.
VW, Porsche agree on sale terms; new name Auto Union?