Porsche family seeks iPO buyout after tearful defeat

More than a decade after Porsche's billionaire clan said goodbye to their crown jewel, the family is set to regain more direct influence over the sports car maker as parent company Volkswagen AG moves forward with one of Europe's largest initial public offerings. 

The share sale, aimed at valuing Porsche at as much as 85 billion euros ($84 billion) — about as much as its parent company — could generate about 10.6 billion euros in revenue for VW. The Porsche family, still led by some individuals who lost control of the iconic automaker back in 2009 after a VW takeover attempt that went wrong, will emerge with a blocking minority.

It's kind of a comeback for Porsche's heirs, left badly bruised after the sports car maker's audacious attempt to swallow up its much larger rival. Both companies share a common history, both in terms of engineering heritage and founding families. Wolfgang Porsche, who remains the doyen of the family, is a cousin of the late Ferdinand Piëch, a longtime VW executive who turned the automaker into the multi-brand giant it is today. 

The Porsche and Piëch family's stake in their eponymous holding company is worth about $10.5 billion, and over the past decade they have received at least $2.9 billion in dividends, according to the Bloomberg Billionaires Index.

Back in 2005, Porsche intended to quietly acquire shares of Volkswagen, a company at the time 15 times its size, with a plan to eventually gain full control. But as the financial crisis devastated markets around the world, Porsche Holding was forced to abandon the bid in 2009, and VW turned around and absorbed Porsche.

The protracted battle culminated in a gathering of staff in the pouring rain in July 2009, where Porsche management and family owners conceded defeat. In his speech, However, Wolfgang Porsche remained steadfast, promising that "the legend of Porsche lives on and will never perish."

This was followed by a complex deal, as a result of which Porsche gradually integrated into the extensive stable of the VW brands along with Audi, Lamborghini and Bentley. The family became an anchor shareholder of the parent company. 

The family's legacy dates back to Wolfgang Porsche's grandfather, Ferdinand Porsche, who created the VW People Car, which later became the Beetle. Ferdinand Porsche's son Ferry Porsche founded the production of sports cars. The first car to bear the Porsche name was registered in 1948, it was the Roadster 356 "No. 1".

The clan today has a few dozen descendants, though few play an active role in business, pursuing careers ranging from medicine to film and e-commerce instead. Many live in Austria in the Alpine region of Zell am See, where Wolfgang Porsche likes to retire to the Schüttgut hunting lodge, and family members cruise along winding roads in vintage cars. 

The spin-outs of sports car brands worked for other representatives of the ultra-rich in the world. Shares of Ferrari NV are up about 265% since the automaker was listed on the New York Stock Exchange, giving Piero Ferrari — the son of the company's founder Enzo — a net worth of roughly $4.1 billion today, according to The Bloomberg Wealth Index.

"Having relinquished control in the past, you now have the next generation of family members who previously cut their teeth in different parts of the Volkswagen empire and see huge potential to unlock shareholder value through porsche AG's IPO," said Michael Dean, senior European automotive analyst at Bloomberg Intelligence.

"You have to remember that this is actually a family business," Dean said.

Listed Porsche will have a two-share structure similar to Volkswagen, with voting and non-voting shares. Porsche's planned small free operation and limited managerial independence – Porsche ceo Oliver Blum will continue as VW's chief executive officer – have caused management problems similar to criticism aimed at VW's intricate structure. 

VW sells 12.5% of the total share capital divided into 25% of the voting preferred shares offered to external investors and 25% plus one share of the ordinary shares of Porsche SE. In order for the family company to finance the purchase of several billion euros, VW will pay special dividends. 

The new installation will give the family the right to veto major strategic decisions at Porsche; Since the takeover of VW, the brand has sometimes had to agree to moves that ultimately ran counter to its interests, such as a plan to create electric vehicles with Audi at the Hanover plant. However, the two companies will remain closely linked to each other – and to the German state of Lower Saxony, another major VW shareholder and home to VW's largest factory.

"This is happening in a typical way for VW: real independence is nowhere to be seen," said Ingo Spijč, who leads sustainability and corporate governance at Deka Investment. The goal is for the family of owners to buy ordinary shares of Porsche and continue to lead the process."