Oliver Blume, the new CEO of the Volkswagen Group, will also head sports car maker Porsche and will be in charge of Porsche’s stock market entry. This worries investors because they are concerned about the CEO’s interests being too fragmented.
One of the managers of Deka Investment, which is one of Volkswagen’s top 20 investors, mentioned his concerns.
“Blume can’t take care of everything, this highlights the mismanagement of the company in Wolfsburg. It’s poison for Porsche’s initial public offering.”
Reuters reported last week that if Porsche decides to go public, it may have to lower the price for the offer as economic hurdles mount. Those concerns have been exacerbated by questions about how Blume will handle the dual role.
Porsche and its IPO
At a recent meeting with investors, Blume and other members of Porsche’s management team described the sports car maker’s potential stock market entry as a means of giving the company greater independence and entrepreneurial freedom, as well as the opportunity to raise more money.
Daniel Roeska, the senior analyst for European transportation at Bernstein Research, commented as follows.
“The official reasons for Porsche AG’s IPO were to make the sports car maker more independent, to finance Volkswagen’s transition to electric vehicles, and to unlock value by crystallizing Porsche’s market capitalization. The decision to appoint Oliver Blum as CEO of Volkswagen and Porsche AG contradicts all three of these justifications.”
Independence is hard to achieve in this case
Porsche can hardly achieve independence because the two car companies, whether at the management or investment level, are highly dependent on each other.
Volkswagen‘s largest shareholder with more than half of the voting rights is Porsche Automobil Holding SE. Lutz Meschke from Porsche is a member of the holding’s board of directors. Hans Dieter Pötsch, Chairman of the Board of Management of Porsche SE, is Chairman of the Supervisory Board of Volkswagen. Tensions over who is pulling the strings in Wolfsburg caused the end of several Volkswagen executives before Diess.