Yahoo Autos Porsche Eyeing IPO as a “Super Premium” Spinoff from the Volkswagen Group
Tempted by billions of dollars and a chance to topple Ferrari, Porsche is considering a potential split from the Volkswagen Group into a separate, publicly traded company.
Porsche's chief financial officer, Lutz Meschke, told Automotive News and other outlets about the idea of Porsche leading a new company that would combine the Stuttgart automaker with Bentley, Bugatti, and Lamborghini. Meschke said the spinoff of the VW group's four “super premium” brands could be valued at up to $81 billion. At current market capitalization, Meschke's enormous estimate is a couple billion shy of the entire VW Group, which includes 11 brands including Ducati motorcycles and Scania and Man trucks. It's also more than triple that of Ferrari ($22 billion), which went public in October 2015, and nearly 18 times that of Aston Martin ($4.6 billion), which began trading on the London Stock Exchange on October 3.
Any split could benefit VW as much as Fiat Chrysler did when it launched Ferrari's initial public offering. In that deal, FCA sold 9 percent of its Ferrari holdings for $893 million and later transferred its remaining stake entirely to FCA shareholders. Before the IPO, Ferrari also transferred $2.8 billion to FCA and absorbed some of its former parent's debt. Ferrari has since doubled in value. FCA, despite a rocky 2016 and a decline this year from an all-time high in January, has a $25 billion market cap and has gained about 60 percent in the same time.
While Porsche's 196,562 sales through September make up less than 3 percent of the entire VW Group, it's easily the most lucrative and fastest-growing luxury brand in Wolfsburg, above Audi. Porsche's half-year profit margin topped 17.5 percent, compared to Audi's 8.9. That still compares unfavorably to Ferrari's 30 percent margin in 2017, which the Italian automaker predicts will surge to more than 38 percent in four years. If Porsche, together with its Italian, British, and French counterparts, can net even higher profits while allowing the VW Group-which likely would keep a partial stake-to realize savings, everyone could win.
That includes Porsche's own ego. The formerly independent company, once controlled by the Porsche and Piëch families, almost went bankrupt attempting to buy the entire VW Group in the late 2000s. By 2009, in a bitter twist of irony during the recession, VW bought a 49.9 percent stake in Porsche and purchased the rest in 2012. Any split is hypothetical at this point, but if a chief financial officer is juicing investors with this talk and hasn't been immediately fired, you can be sure the VW Group is in hot pursuit of a separate Porsche.
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