Porsche SE Looks at Mid-Size German Companies to Expand

Porsche Automobil Holding SE, Volkswagen AG’s majority shareholder, said it’s confident of finding acquisitions that will enable the company to expand its assets beyond control of Europe’s largest carmaker.

“Our focus is on strategic investments in midsize companies in Germany and abroad with experienced management,” Martin Winterkorn, chief executive officer of both Porsche and Volkswagen, said today in a speech at a press conference near the holding company’s headquarters in Stuttgart, Germany. “Our unique expertise in the automotive sector will enable us to make optimal investment decisions.”

Porsche SE owns 50.7 percent of the common stock in Wolfsburg, Germany-based Volkswagen, which is its only directly held asset following the sale of the Porsche AG sports-car brand to VW. After repaying 2 billion euros ($2.58 billion) in bank debt with proceeds from the disposal, Porsche said last year that it plans to make investments “along the automotive value chain,” including in energy trading and real estate.

Philipp von Hagen, board member in charge of investment management, said after the press conference that Porsche would look at companies that offer “disproportional development potential.” Investments, while difficult to predict, may be as high as the “triple-digit” million-euro range, he said.

Disposal Gain

Net income last year surged to 7.83 billion euros from 59 million euros in 2011, boosted by a 4.75 billion-euro contribution from the sale of the sports-car business to VW. Net liquidity improved to 2.56 billion euros on Dec. 31 from minus 1.52 billion euros at the end of 2011.

Porsche proposed a dividend for 2012 of 2.01 euros per preferred share, 2.6 times the 76-cent payout a year earlier, and 2 euros per ordinary share, up from 75 cents. The preferred stock is publicly traded, while the ordinary shares, which carry voting rights, are held by the Porsche and Piech families and the Persian Gulf sultanate of Qatar.

The payout for 2012 is higher than usual to reward shareholders for their “loyalty,” while the dividend for 2013 could be lower again, Chief Financial Officer Hans Dieter Poetsch said at the press conference.

The company expects profit in the “low single-digit billion-euro range” for 2013 and 2014, it said today.

Volkswagen completed buying full control of the Porsche sports-car business in August, ending a seven-year saga in which VW turned the tables on the maker of the 911 model following a takeover attempt that collapsed.

Funds’ Lawsuits

Porsche SE, which is fighting market-manipulation allegations in three countries over the failed bid for VW more than four years ago, may be able to consolidate most of the litigation in Germany after a group of hedge funds dropped a U.S. appeals-court case.

Elliott International LP and 11 other hedge funds agreed to end their suit at the U.S. Court of Appeals in New York, according to a court filing published March 6. The funds will instead focus on a parallel German case seeking 1.8 billion euros.

The legal wrangling ultimately scuttled a planned merger between the two companies. Investors claim Porsche failed to inform shareholders about its takeover plan. Elliott International has filed one of four cases seeking more than 4 billion euros combined at a court in Braunschweig, Germany.

The decision in the Elliott International case doesn’t end the U.S. litigation. Twenty other funds are continuing a separate case in the U.S. federal court.

Winterkorn reiterated that Porsche views all pending legal claims as unfounded.

Porsche has set aside 41 million euros to cover costs related to the lawsuits and fees for lawyers, Poetsch said. It hasn’t set up provisions for possible damage claims, he said.

Before it's here, it's on the Bloomberg Terminal.