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Abstract

German carmakers, Porsche and Volkswagen, have enjoyed a long history of close alliances and have collaborated on various projects. Volkswagen supplies about 30% of the automobile parts Porsche uses. But when the luxury sports carmaker, Porsche acquired a 20% stake in mass-market carmaker Volkswagen, it created apprehensions in the minds of shareholders of both the companies. Porsche''s investors were apprehensive about the deal that ties Porsche to a company, which has been struggling financially. On the other hand, Volkswagen shareholders worried about the delay in the company''s restructuring process and future of the company. In question was the role of Volkswagen''s non-Executive Chairman, Ferdinand Piech, who also happens to be the grandson of Ferdinand Porsche (founder of Porsche) and a major shareholder of Porsche. The case study provides an insight into the clash of interests, which has triggered a crisis in German corporate governance and provides scope for discussing the future of the Porsche-Volkswagen deal.
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October 2005

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Abstract

German carmakers, Porsche and Volkswagen, have enjoyed a long history of close alliances and have collaborated on various projects. Volkswagen supplies about 30% of the automobile parts Porsche uses. But when the luxury sports carmaker, Porsche acquired a 20% stake in mass-market carmaker Volkswagen, it created apprehensions in the minds of shareholders of both the companies. Porsche''s investors were apprehensive about the deal that ties Porsche to a company, which has been struggling financially. On the other hand, Volkswagen shareholders worried about the delay in the company''s restructuring process and future of the company. In question was the role of Volkswagen''s non-Executive Chairman, Ferdinand Piech, who also happens to be the grandson of Ferdinand Porsche (founder of Porsche) and a major shareholder of Porsche. The case study provides an insight into the clash of interests, which has triggered a crisis in German corporate governance and provides scope for discussing the future of the Porsche-Volkswagen deal.

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Location:
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Other setting(s):
October 2005

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