Porsche Taps Brakes On Talk of Listing -- WSJ

By William Boston 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (October 16, 2018).

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 [e-mail]

(END) Dow Jones Newswires

October 16, 2018 02:47 ET (06:47 GMT)

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