Here’s the facts first: Porsche SE racked up an impressive €10 billion in debt while it was attempting to take over fellow German automaker Volkswagen. Shortly after, the two automakers agreed to combine forces back in 2009, but the mess they left behind on the stock market is haunting and delaying them
The two announced yesterday that their plan for a merger is being delayed and will not finish by the end of the year as was originally scheduled. This is because of ongoing court battles with short sellers that have reportedly lost money on VW stock that was secretly being bought by Porsche, thus unjustifiably propping up prices beyond valuation.
These investors have reportedly lost about a $1 billion and their court action could not be cleared in time for the two automotive giants to become one by the end of the year.
The new made public yesterday has resulted in selling of Porsche stock in Frankfurt trading, where it has closed 14 percent down for on Friday, the biggest loss since May 7th, 2009, according to Bloomberg. In addition to this, prices are now down 26 percent for the year to date, and given the fact that the merger won’t take place any time soon, it’s unlikely the stock will end the year up. Volkswagen share did not fair much better, though it was only down 3.9 percent.
“The lawsuits are posing risks that cannot be quantified,” said Tim Schuldt, a Frankfurt-based analyst at Equinet AG. “We won’t see results on the suits until next year. Moving ahead with a merger in such an unpredictable environment would be the wrong thing to do.”
These investors have reportedly lost about a $1 billion and their court action could not be cleared in time for the two automotive giants to become one by the end of the year.
The new made public yesterday has resulted in selling of Porsche stock in Frankfurt trading, where it has closed 14 percent down for on Friday, the biggest loss since May 7th, 2009, according to Bloomberg. In addition to this, prices are now down 26 percent for the year to date, and given the fact that the merger won’t take place any time soon, it’s unlikely the stock will end the year up. Volkswagen share did not fair much better, though it was only down 3.9 percent.
“The lawsuits are posing risks that cannot be quantified,” said Tim Schuldt, a Frankfurt-based analyst at Equinet AG. “We won’t see results on the suits until next year. Moving ahead with a merger in such an unpredictable environment would be the wrong thing to do.”
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