Case Study Vw/Porsche
Volkswagen and Porsche
One Family, Two Car Companies, & a Battle for Corporate Control
Dr. Heike Nolte University of Applied Sciences Emden-Leer Constantiaplatz 4 26723 Emden, Germany Tel: +49 4921 807 1007 Fax: +49 4821 807 1228 heike.nolte@hs-emden-leer.de Dr. Alva Wright Butcher School of Business and Leadership University of Puget Sound 1500 N. Warner St. #1032 Tacoma, WA 98416-1032 Tel: 253- 879-3349 Fax: 253-879-3156 butcher@pugetsound.edu Supported by a 2011 NIBEN Curriculum Development Grant September 2011
Volkswagen and Porsche: One Family, Two Car Companies, & a Battle for Corporate Control
Page 1
Electronic copy available at: http://ssrn.com/abstract=1996386
Introduction Over the past several years, Porsche and Volkswagen have been involved in a saga that is stranger than fiction. It started by the attempt of the small car manufacturer Porsche to take-over Europe 's biggest auto firm Volkswagen and finally turned Porsche into Volkswagen 's "brand # 10". On the way, hedge-funds lost a fortune, Porsche earned more revenues from financial transactions than from producing cars, one part of the IG Metall union fought against another part of the same union, the German parliament passed a law which was very similar to a law that had been dismissed by the European Union Court of Justice. How could this saga of events happen? What led to a complete turnaround in this battle for corporate control? Figure 1 presents a timeline of some of the key events in this takeover battle.
History Volkswagen – the Peoples Car In 1934, Hitler announced that he wanted the German automobile industry to build an affordable car for the people. He wanted a car that could seat four people, get 40 miles to the gallon, and cost no more than 1000 Marks (or around $250).1 The engineer who submitted the best design and was awarded the contract was Ferdinand Porsche. A new firm was founded whose only purpose was to produce the common people’s car, the “Volkswagen”. Porsche
One Family, Two Car Companies, & a Battle for Corporate Control
Dr. Heike Nolte University of Applied Sciences Emden-Leer Constantiaplatz 4 26723 Emden, Germany Tel: +49 4921 807 1007 Fax: +49 4821 807 1228 heike.nolte@hs-emden-leer.de Dr. Alva Wright Butcher School of Business and Leadership University of Puget Sound 1500 N. Warner St. #1032 Tacoma, WA 98416-1032 Tel: 253- 879-3349 Fax: 253-879-3156 butcher@pugetsound.edu Supported by a 2011 NIBEN Curriculum Development Grant September 2011
Volkswagen and Porsche: One Family, Two Car Companies, & a Battle for Corporate Control
Page 1
Electronic copy available at: http://ssrn.com/abstract=1996386
Introduction Over the past several years, Porsche and Volkswagen have been involved in a saga that is stranger than fiction. It started by the attempt of the small car manufacturer Porsche to take-over Europe 's biggest auto firm Volkswagen and finally turned Porsche into Volkswagen 's "brand # 10". On the way, hedge-funds lost a fortune, Porsche earned more revenues from financial transactions than from producing cars, one part of the IG Metall union fought against another part of the same union, the German parliament passed a law which was very similar to a law that had been dismissed by the European Union Court of Justice. How could this saga of events happen? What led to a complete turnaround in this battle for corporate control? Figure 1 presents a timeline of some of the key events in this takeover battle.
History Volkswagen – the Peoples Car In 1934, Hitler announced that he wanted the German automobile industry to build an affordable car for the people. He wanted a car that could seat four people, get 40 miles to the gallon, and cost no more than 1000 Marks (or around $250).1 The engineer who submitted the best design and was awarded the contract was Ferdinand Porsche. A new firm was founded whose only purpose was to produce the common people’s car, the “Volkswagen”. Porsche
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