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Piech firmly behind the wheel at VW and Porsche

However the Volkswagen-Porsche stand-off resolves itself, it looks as if Ferdinand Piech holds all the cards. That should worry VW <VOWG.DE> investors.

Just look at how things stand. VW’s chairman has an iron grip on the carmaker’s board, having struck an alliance with the unions who control half the seats on it. Meanwhile, he and some of his relatives also have a blocking stake at Porsche <PSHG_p.DE>.

Piech is in dispute with Porsche’s management and his Porsche cousins, with whom he shares control of the sports car maker. But he seems to have them in a box. Piech can stop Porsche raising money to pay down its massive 10.75 billion euro debt by issuing shares or selling assets — the possible solutions proposed by the Porsche clan. So it apparently has no alternative but to strike a deal with VW.

What does Piech want? His plan seems to be for VW to buy 49 per cent of Porsche’s sports car unit for cash, allowing the smaller company to pay off some of its debts — but leaving it pretty much as a shell company which holds a 51 percent stake in VW. Piech will then be both chairman of VW and have a blocking stake in its controlling shareholder. Nothing can be done without his consent.