Qatar owns 17% of VAG, The death of Porsche.

Porsche SE yesterday agreed to combine with Volkswagen AG after a four-year attempt to take over the larger German rival left Porsche paralyzed with debt. Qatar will own 17 percent of VW with options accumulated from Porsche, making the Gulf kingdom the third-largest investor in Europe’s biggest carmaker.

Qatar used its $63 billion sovereign wealth fund to give the world’s second-richest country behind Liechtenstein investment clout, snapping up stakes in established brands or troubled companies in need of cash. Four years after its inception, the fund has become the biggest shareholder in Barclays Plc, J. Sainsbury Plc and Credit Suisse AG.

“There is an incentive to invest in these known, luxury- sort of top brands,” said Rachel Ziemba, a senior analyst at New York’s RGE Monitor, which researches sovereign wealth funds. “Rather than investing in a whole number of companies that might be harder to keep track of, Qatar’s investment strategy is more akin to a private equity model.”

Hailed by Germany’s Manager Magazin as “The Saviors from the Orient,” Qatar Emir Sheikh Hamad bin Khalifa Al-Thani has transformed his country of about 1 million citizens into a center of education and research that include the Arabic television network Al Jazeera and local campuses of six U.S. universities.

Sandhurst Education

Born in 1952 and a graduate of the Royal Military Academy in Sandhurst in the U.K., the emir has opened up his country to embrace freedom of press and improved education, and Qatar hosted municipal elections in which women and men participated.

The emir’s wife, Sheikha Mozah bint Nasser Al Missned, heads the Qatar Foundation that fosters education and research. Qatar’s interest in German engineering partly stems from her personal preference for Porsche cars, German newspapers Frankfurter Allgemeine Zeitung have reported.

The sheikha wants to use Porsche’s engineering expertise to complement a science technology center that she helps oversee as chairman of the Qatar Foundation, she told Germany’s Focus magazine in June. She recently toured European countries including Germany and France to deepen ties. Spokespeople for the emir and the Qatari Investment Fund declined to comment.

German Engineering

Porsche sales in Qatar have more than tripled in three years to more than 600 units in the last 12 months, according to the company. Porsches typically adorn the entrances of luxury hotels or cruise down the six-lane cornice along the crescent- shaped seafront of Doha, the Qatari capital.

“This also reflects our fantastic business development in the whole region over the last couple of years,” Porsche spokesman Michael Baumann said in an e-mail. Porsche Chairman Wolfgang Porsche told workers at a gathering in Stuttgart, Germany today that Porsche will seek to preserve its independence and that Porsche’s “myth will never die.”

Qatar emerged as an investor after the carmaker’s unsuccessful bid for Volkswagen created a rift between CEO Wendelin Wiedeking and Wolfgang Porsche on the one side, and Volkswagen Chairman Ferdinand Piech on the other.

Wiedeking agreed to step down yesterday, paving the way to integrate Porsche’s car manufacturing into Volkswagen alongside brands such as Audi and Bentley. The Porsche SE holding company will remain Volkswagen’s biggest shareholder with about 51 percent of the shares, while the federal state of Lower Saxony will own 20 percent. Michael Macht, Porsche’s head of production, will succeed Wiedeking.

British Protectorate

“Porsche appears to be now firmly stuck in the mud unable to have any control over its destiny,” said Howard Wheeldon, a senior strategist at BGC Partners LP in London.

When Porsche was established in the 1930s, Qatar was an isolated British protectorate, without schools or a fully functioning hospital. The country, once dependent on its pearl industry, began exporting oil after World War II.

By the 1960s, Qatar’s network of paved roads included one to the west coast oil fields and another south to Qatar’s Mesaieed industrial center, said Vahe Halajian, managing director of sign maker Qatar Neon Light Co.

“Anywhere else you wanted to go, you had to have four- wheel drive,” said Halajian, a U.S. citizen who first visited Qatar in 1963 when his father opened the sign business in Doha. “I wouldn’t recommend driving a Porsche on the Qatar roads in the 60s.”

Petroleum Wealth

Gas exports have helped increase Qatar’s gross domestic product to $101 billion, or $101,000 for each of the about 1 million men, women and children on the thumb-shaped peninsula -- among the highest per-capita GDPs in the world.

The Gulf has become a key investor in the German car industry as cash dwindles amid the worst automotive market in decades. Abu Dhabi’s Aabar Investments PJSC bought 9.1 percent of Daimler AG for 1.95 billion euros in March to become the largest shareholder in the maker of Mercedes-Benz cars. Kuwait is its second-largest owner with 6.9 percent.

“Porsche has acquired the reputation of one of the most renowned and versatile providers of engineering services the world over,” Abdelali Haoudi, vice president of research for the Qatar Foundation, said in a July 21 e-mail. Porsche “is truly a remarkable and an outstanding piece of technology that Qatar as a whole can benefit from.”

‘Significant Role’

The sovereign wealth fund overseen by Prime Minister Sheikh Hamad bin Jassim bin Jaber Al-Thani was created in 2005 to spend Qatar’s surplus generated from petroleum exports. Smaller than neighboring Abu Dhabi’s $700 billion fund or Norway’s $350 billion oil fund, the Qatari fund’s strategy of taking large stakes may help the Gulf state become a more active shareholder.

“I see them as being investors that want to take a significant role in the management of the companies they are taking stakes in,” said Ziemba, the RGE Monitor analyst.

Qatar’s overtures haven’t always been welcome. In September 2007, the emirate bought 9.98 percent of Swedish stock-market operator OMX AB, threatening a bid by Nasdaq Stock Market Inc. and Borse Dubai for the exchange. OMX founder Olof Stenhammar said at the time that he didn’t know what Qatar wanted or understand its strategy. After forcing the other suitors to raise their price, Qatar left the battle and sold its holding.

Today, Qatar can rely on its status as the world’s biggest liquefied natural gas producer to fuel its investment ambitions, as other sovereign wealth funds retrench. Norway’s fund had its worst return in its 18-year history in the third quarter, and Abu Dhabi’s fund also lost in value, Ziemba estimates.

For Qatar, there’s no sign the development will slow, as the kingdom plans to more than double output of liquefied natural gas by the end of 2010.

Qatar has “a favorable cash flow position because of the development of the gas fields,” said Brad Setser, an economist at the New York-based Council on Foreign Relations, an independent institute that studies geopolitics. “It’s in a position to continue to invest where some other funds are not.”

Source: Bloomberg

Porsche CEO Says Sale Imminent

Porsche SE, the sports-car maker that may merge with Volkswagen AG, is likely to reach an agreement on a stake sale in a few days, Chief Executive Officer Wendelin Wiedeking said in an interview.

“I think all the details will be solved within the next days,” Wiedeking told Bloomberg Television last night when asked whether Porsche will be sold to Volkswagen. A proposal “is already on the table,” he said in Ingolstadt, Germany, where he’s attending the 100th anniversary celebration for Volkswagen’s Audi division.

Porsche is also considering an offer by the Qatar Investment Authority to buy a stake in Porsche’s holding company and options on Volkswagen stock. Stuttgart-based Porsche is considering ways to reduce more than 9 billion euros ($12.7 billion) in debt after amassing a 51 percent stake in VW as well as the options for 20 percent of the Wolfsburg-based carmaker, Europe’s largest.

Porsche’s power struggle with Volkswagen appears to be “over,” Lower Saxony state Prime Minister Christian Wulff told reporters as he arrived at the Audi event. Wulff said he’s “very confident of good results” from meetings that Porsche’s and Volkswagen’s supervisory boards plan on July 23.

The sports-car maker’s top labor leader said that Volkswagen must double its offer for a 49 percent stake in Porsche’s automotive unit.

The “exact correct price” is 7 billion euros to 8 billion euros, Uwe Hueck, head of Porsche’s works council, said in an interview with Germany’s ZDF television July 15. “The 4 billion euros will not even suffice. We also need liquidity.”

‘Against Raiding Coffers’

Hueck, who is Porsche’s deputy chairman, said he’s “against raiding Volkswagen’s coffers” for the sake of erasing debt. He said the Porsche and Piech families, who control all voting rights on Porsche shares, should take part in a 5 billion-euro capital increase and pave the way for Qatar to buy a stake and the VW options.

Wiedeking will remain at the helm “for as long as his contract permits, and that’s until 2012,” Hueck said. German weekly magazine WirtschaftsWoche has reported that the CEO will step down.

Wiedeking transformed the manufacturer of the 911 and the Cayenne, almost bankrupt when he became CEO in 1993, into the automaker with the industry’s highest profit margins. In 2005, he began using cash from the luxury-vehicle business to acquire shares of Volkswagen, a company that builds more cars in a week than Porsche does in a year.

Share Sale

Qatar and the family owners have been asked to participate in a planned 5 billion-euro share sale at Porsche, people familiar with the talks said this week. Qatar may pay 2 billion euros for a stake, one of the people said.

At the same time, Porsche may hand over the options that can be converted into a 20 percent stake in VW to Qatar for free, the people have said. Qatar would then pay about 5 billion euros to banks that sold Porsche the derivatives, they said.

An investment by the Persian Gulf state may give Wiedeking, 56, leverage to negotiate a deal to merge with VW. The families agreed in May with VW to pursue a merger to create a 10-brand behemoth that would include the Audi luxury division of VW as well as its Seat and Skoda mass-market units.

Wulff, the regional government leader, said July 14 that Lower Saxony would welcome Qatar as a “third strong shareholder” in VW. Lower Saxony is Volkswagen’s home state and the carmaker’s second-biggest shareholder, with a 20 percent stake and the power to veto decisions.

Source:Bloomberg

Porsche Chief Obstructs Merger With VW

Chief Executive Officer Wendelin Wiedeking is obstructing a possible merger with Volkswagen AG, VW union chief Bernd Osterloh said, calling on the sports-car maker’s CEO “to end his ego trip.”

“Wiedeking has not yet realized that he’s part of the problem and not part of the solution,” Osterloh said in an interview with Wolfsburger Allgemeine Zeitung. “Together, one could do a whole lot of more things if Wiedeking would end his ego trip at last.” Gunnar Kilian, a spokesman for Volkswagen’s works council, confirmed Osterloh’s remarks by telephone.

Porsche, which started acquiring Volkswagen shares in 2005, has gone from the potential buyer of VW to the one struggling to remain independent in the eight-month-long battle between the German carmakers. Saddled with more than 9 billion euros ($12.6 billion) of debt, Stuttgart-based Porsche is in talks with Qatar about selling a stake as well as some options that can be converted into Wolfsburg-based Volkswagen’s stock.

MORE:>Source:Bloomberg

VAG engines to power possible IRL chassis

As VW said almost 2 years ago they are still looking into entering engines to the IRL along with Audi, Porsche, FIAT, AlfaRomeo, Nissan, which Honda has dominated since Chevrolets departure almost 8 years ago.

Small Snippet: Motorsport.com