Volkswagen Ex-Chairman in Talks With Remaining Heirs to Sell Most of Stake -- Update

By William Boston 

BERLIN -- Ferdinand Piech, whose grandfather designed the original VW Beetle, is in talks with the remaining heirs to sell most of his shares that control Volkswagen AG, the family holding said Friday.

Mr. Piech, who turns 80 this year, holds about 14.7% of the common stock of Porsche Automobil Holding SE, the family holding that controls about 52% of the voting stock of Volkswagen.

Mr. Piech's shares are worth about EUR1.14 billion ($1.22 billion) based on Friday's share price of EUR50.84. Under agreements with other heirs in the Piech and Porsche families, the family has the first option to purchase Mr. Piech's shares.

The family holding has about EUR1.2 billion in cash on its balance sheet that could be used to finance the acquisition of Mr. Piech's shares, according to a person familiar with the situation.

The sale would be the final step in Mr. Piech's withdrawal from the role of power broker at Volkswagen. He resigned as chairman of the supervisory board in 2015 after a bitter feud with his family over his efforts to oust then-Chief Executive Martin Winterkorn.

Mr. Piech's relationship with Volkswagen has remained tense since then. Mr. Winterkorn survived the attacks from his former mentor, but when U.S. authorities disclosed on Sept. 18, 2015, that Volkswagen had rigged diesel engines to cheat emissions tests, Mr. Winterkorn resigned under pressure.

In February, Volkswagen threatened Mr. Piech with legal action when sworn testimony that he gave to investigators alleged that Mr. Winterkorn knew about the emissions cheating long before it became public. Mr. Winterkorn has denied the allegation.

The sale of Mr. Piech's shares in Porsche Holding would also mark the end of an era during which the talented but cantankerous engineer transformed Volkswagen from a company near collapse into a global automotive conglomerate that last year fulfilled his dream of overtaking Toyota Motor Corp, to become the world's biggest auto maker.

The share sale would have no direct impact on Volkswagen AG or its subsidiaries that include car makers Volkswagen, Porsche, Audi, Skoda, SEAT, Bentley and Lamborghini. But it could spark a realignment of the family's representation at the company.

At the end of May, the Porsche Holding supervisory board is set to be restructured. Under an agreement with the IG Metall trade union, which now has seats on the holding's board, labor representatives would step down and the board will be reduced in size.

Mr. Piech is expected to step down from the Porsche Holding board at that meeting. One of his cousins, Hans-Peter Porsche, who turns 77 years old this year, could also step down and hand the reins to his son, Peter Daniell Porsche, according to the person familiar with the situation.

"These things are all under discussion now and could be decided soon," the person said.

The changing of the guard within the Porsche clan that controls Volkswagen will bring a new generation of family members into key positions. But unlike their fathers, none of them are engineers with the ambition of playing an active role in the day-to-day management of the company.

If Mr. Piech relinquishes his remaining ties to Volkswagen by selling his shares, he could be the last heir of Ferdinand Porsche to play an active role in designing Volkswagen vehicles and managing the business.

Write to William Boston at [e-mail]

(END) Dow Jones Newswires

March 17, 2017 17:43 ET (21:43 GMT)

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