Porsche Slams the Brakes on IPO Speculation--Update
October 15 2018 - 9:05AM
Dow Jones News
By William Boston
BERLIN -- Porsche AG, the sports car maker owned by Volkswagen
AG, reined in its finance chief on Monday after he fueled
speculation that the company was discussing a potential listing of
a super luxury group combining Porsche, Lamborghini, Bugatti and
Bentley that could value the group at up to EUR70 billion ($81
billion).
In an official statement, Porsche sought to walk back the
comments, rejecting "speculation" about a possible listing of some
or all of the company.
"Porsche does not currently have any plans to pursue a (partial)
initial public offering. The Stuttgart-based sports car
manufacturer denies all reports to the contrary that claim an IPO
is in progress," the company said in a statement.
Porsche CFO Lutz Meschke made the comments on the sidelines of a
media event at Porsche on Friday, but they weren't reported until
Monday. Porsche didn't deny that Mr. Meschke made the comments or
claim he had been misrepresented in reports.
When asked by reporters about a possible listing of all or part
of Porsche, Mr. Meschke said a luxury car group combining
Volkswagen brands Porsche, Lamborghini, Bentley and Bugatti, would
be worth many times more than Ferrari, which went public in 2015
and is worth about EUR19 billion. He said a valuation of the
Porsche-led luxury group of EUR60 billion to EUR70 billion "doesn't
sound like a stretch," according to media reports.
Mr. Meschke also said he had raised the issue with the Porsche
family, Volkswagen's biggest shareholder, and with Volkswagen
executives, adding that any decision about an IPO rested with
Porsche's parent Volkswagen, according to the reports.
He appears to have spoken in such detail that analysts and
investors considered his comments a clear indication that
Volkswagen was, in fact, seriously discussing a potential listing
of its most valuable brands -- something many analysts have urged
the group to consider.
"We believe that a separate listing (preferably as a spin off)
of Porsche AG is one of the most obvious and logical ways for VW
Group to unlock value," said Arndt Ellinghorst, London-based
automotive analysts at Evercore ISI, in a note to clients on
Monday.
Analysts have long complained that through its conglomerate
structure grouping more than a dozen brands and businesses, the
market dramatically undervalues Volkswagen. Mr. Ellinghorst
suggested that if the company were to spin off minority stakes in
various brands and businesses Volkswagen's market value could rise
to EUR150 billion from around EUR70 billion today.
"The VW Group is a story of locked up value," Mr. Ellinghorst
said.
That's why investors latched onto the Porsche CFO's comments on
Monday, driving Volkswagen share up nearly 2% by midday,
outperforming the broader Dax index of German blue chips listed on
the Frankfurt Stock Exchange.
Volkswagen is also preparing its trucks business, Traton AG, for
a listing, but it has yet to set a date for the offering.
Volkswagen transformed the trucks business into a separate
wholly-owned stock company to prepare it for a potential
listing.
Ferrari's listing three years ago put pressure on the owners of
other sports and luxury car brands to consider spinning off their
valuable assets. Investors like the opportunity to trade on the
individual businesses as both the listed unit and its parent
company tend to be valued higher after an IPO.
In the case of Ferrari, its parent company Fiat Chrysler
Automobiles NV saw its shares rise in the wake of the spinoff. In
Volkswagen's case, a Porsche listing could add substantial value to
the company's market value if it were valued as a luxury brand,
like Ferrari, Mr. Ellinghorst said.
While analysts are confident Porsche could succeed in selling
itself to investors as a luxury manufacturer, there is a risk of a
lower valuation if investors don't buy the pitch.
Aston Martin Lagonda Global Holdings PLC pitched itself to
investors as a luxury brand, often comparing itself to Ferrari, as
a justification to value the company at more than six billion
pounds. But when it went public last months, it had to lower its
asking price for the shares and ultimately listed at a valuation of
about GBP4.3 billion ($5.7 billion).
Write to William Boston at william.boston@wsj.com
(END) Dow Jones Newswires
October 15, 2018 08:50 ET (12:50 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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