# Porsche Could Buy VAG!!



## W7 PMC (May 6, 2002)

That got your attention :lol: :wink:

I've been reading within various debates on the virtues of Porsche etc. & how they're meant to be the most profitable Auto Manufacturer on the planet. This i guess could be true, but i also hear usually in the same debate, that as Porsche already have a stake in VAG & the fact they're SO profitable, that in fact Porsche if they wanted to could buy VAG, yet the reverse could not happen (i.e. VAG buy Porsche).

Now i'm fairly comfortable with the virtues of the P&L, Balance Sheets & Companies Net Worth etc. but surely someone somewhere is having a laugh :lol:

Far from being a dig at Pork, but how could a rather upmarket sports car (ignoring the Cayenne) manufacturer, making/selling only high value products in i guess reasonable demand/numbers, afford to buy possibly the largest vehicle manufacturer on the planet what with the VW, Audi, Skoda, Seat, Lambo & Bugatti marques.

Has something major happened at Porsche that i've missed? have they won the Euro Millions Lottery??

Surely this would be like ebay buying Microsoft or Google buying HP?? Where the hell would Porsche be able to afford to buy VAG & yet VAG could not afford to buy Porsche (assuming either wanted to other).


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## tdk (Jul 22, 2003)

I'm not financial expert, but isn't it down to cash flow rather than net worth?

Porsche have a high profit margin with large cash reserves, which means they could afford to service the loans required to purchase VAG (they wouldn't likely buy with a pure cash deal), but VAG - having low profit margins and most of their cash held in assets - couldn't necessarily service the debt associated with to buying Porsche.

I think you'll find that, in percentage terms, Porsche is more valuable than VAG due to it's high profit margins.

Simon.


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## jbell (May 15, 2006)

Porsche hold a 29%? stake in VAG, they bought this with cash.

Porsche will never buy VAG outright as it would be stupid. They have the stake to stop anyone else trying to take over and it also gives them a seat on the board and some control over Audi, Lambo and Bugatti.

Porsche have already put the obligatory (under German law) offer in to purchase the rest of the shares but it was turned down as too low (deliberate by porsche so they didn't have to buy VAG), they can now sit there and control VAG to an extent and are sure no one else can come in.


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## W7 PMC (May 6, 2002)

tdk said:


> I'm not financial expert, but isn't it down to cash flow rather than net worth?
> 
> Porsche have a high profit margin with large cash reserves, which means they could afford to service the loans required to purchase VAG (they wouldn't likely buy with a pure cash deal), but VAG - having low profit margins and most of their cash held in assets - couldn't necessarily service the debt associated with to buying Porsche.
> 
> ...


I understand that, but high margin low volume vs low margin high volume, does not make a one company more cash rich that another.

If we say both Porsche make a 25% margin on all their cars (i doubt that very much) & VAG make a 5% margin on all their cars, given VAG outsell Porsche by at least 100 fold, the simple maths just make no sense. VAG could easily secure funding (if required) against their far bigger Asset Base.


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## mighTy Tee (Jul 10, 2002)

Slightly off topic:

My understanding is the biggest car company in the world is Toyota. They are also (claim to be) the most cash rich car company in the world.


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## BAMTT (Feb 22, 2004)

just had a look at the market cap in Euros, Porsche is unlisted according to bloomberg but has a market cap of 22bn the VAG group is 45bn, so if Pork are going for just VW i would guess its possible :? dunno

ps HP are $122bn


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## W7 PMC (May 6, 2002)

BAMTT said:


> just had a look at the market cap in Euros, Porsche is unlisted according to bloomberg but has a market cap of 22bn the VAG group is 45bn, so if Pork are going for just VW i would guess its possible :? dunno
> 
> ps HP are $122bn


Good find, so HP could buy VAG & Porsche :lol:

I'll have a word with my boss & see if we can put a sneaky bid in :wink:


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## was (Mar 24, 2003)

BAMTT said:


> ps HP are $122bn


I have always wondered about the mark-up on sauces :evil:


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## S10TYG (Mar 7, 2007)

Porsche is the most profitable car company in the world. thats where the Â£Â£Â£ come from


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## W7 PMC (May 6, 2002)

S10TYG said:


> Porsche is the most profitable car company in the world. thats where the Â£Â£Â£ come from


But that does not mean the greatest overall profit, it could be the biggest profit margins etc. I doubt overall that Porsche make a larger annual profit than VAG, but they do appear & i can understand they make a higher profit margin per unit.

Profit can be viewed as overall volume or %age. If i had a company that turned over Â£1 but made 90pence gross profit & say 60pence nett profit, then my company by %age would be more profitable than Microsoft, HP & Apple, but i'd not quite have enough money to buy them :wink:


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## tdk (Jul 22, 2003)

BAMTT said:


> ps HP are $122bn


Any idea what Google are?


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## BAMTT (Feb 22, 2004)

tdk said:


> BAMTT said:
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$159BN  crazy uh ?


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## W7 PMC (May 6, 2002)

BAMTT said:


> tdk said:
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Their raises another interesting issue, but more IT related than car related, almost all of Googles net worth relates to what the trading markets feel the company is worth, as opposed to it's actual worth on paper. Google makes nothing & owns very little, however the brand & market share is second to none, so they're seen as a very high worth company, but on paper their worth is considerably less.

It's a funny old game. If you added Googles total revenues since inception, i reckon they'd not even come close to their overall current worth :wink:

As you know, revenue & profit although markers, nowadays have less of an effect on a companies worth.

If a company CEO gets fired, that companies value could halve overnight, even though their revenues, profits, customer sats etc. may be going up :?


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## BAMTT (Feb 22, 2004)

W7 PMC said:


> BAMTT said:
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Who said the 'Dot Com' bubble burst :lol:


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## W7 PMC (May 6, 2002)

BAMTT said:


> W7 PMC said:
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You're not wrong their


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## jampott (Sep 6, 2003)

W7 PMC said:


> BAMTT said:
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Oh blimey... having got the "You're" spot on, you fucked up with the "their".


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## W7 PMC (May 6, 2002)

jampott said:


> W7 PMC said:
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Am I bovvered (sp) :wink:


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## Toshiba (Jul 8, 2004)

Porka has kept VW afloat for years, they stopped others from taking them over by buying loads of shares up after/during the time they got took to court due to the obscure German law about no foreign ownership.


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## clived (May 6, 2002)

W7 PMC said:


> I doubt overall that Porsche make a larger annual profit than VAG, but they do appear & i can understand they make a higher profit margin per unit.


For FY07 VAG expects profit before tax to be â‚¬5.1Bn. They expect to sell over 6,000,000 cars for the first time. Average profit per car therefore something under â‚¬850 if my maths is correct.

For FY06, Porsche pre tax profits were â‚¬1.668Bn. They sold 96,794 cars. Average profit per car therefore something over â‚¬17k. Worth noting however that Porsche state that their excellent financial performance was bolstered by some one-off activity:

_The unusually large jump in earnings in the reporting year to a total of 2.110 billion Euro is due, however, to special factors and non-recurring effects. This also applies to the rise in the net income for the year to 1.393 billion Euro after 779 million Euro in the previous year. These extraordinary effects include the sale of CTS Fahrzeug-Dachsysteme GmbH, which resulted in a book gain of 80.7 million Euro, and the Porsche income from the equity investment in Volkswagen AG._


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## clived (May 6, 2002)

mighTy Tee said:


> Slightly off topic:
> 
> My understanding is the biggest car company in the world is Toyota. They are also (claim to be) the most cash rich car company in the world.


Toyota has a market cap around $230Bn.

For comparison, Microsoft is at $272Bn and Google Â£159Bn.


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## BAMTT (Feb 22, 2004)

clived said:


> mighTy Tee said:
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Exxon Mobil $479bn       although IBM at $150bn has the greatest weighting in the Dow :?


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## W7 PMC (May 6, 2002)

clived said:


> W7 PMC said:
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> > I doubt overall that Porsche make a larger annual profit than VAG, but they do appear & i can understand they make a higher profit margin per unit.
> ...


Doubt i'll buy a Porsche now then if that's the mark-up :lol: 17K Euro average on each car  I'll pop down to a local Pork shop & demand a Â£10K discount on a shiny new 997 Turbo 8)


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## clived (May 6, 2002)

W7 PMC said:


> Doubt i'll buy a Porsche now then if that's the mark-up :lol: 17K Euro average on each car  I'll pop down to a local Pork shop & demand a Â£10K discount on a shiny new 997 Turbo 8)


You've obviously not taken the laws of supply and demand into account ;-)


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## W7 PMC (May 6, 2002)

clived said:


> W7 PMC said:
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> > Doubt i'll buy a Porsche now then if that's the mark-up :lol: 17K Euro average on each car  I'll pop down to a local Pork shop & demand a Â£10K discount on a shiny new 997 Turbo 8)
> ...


I've not got my head around cashflow yet or gearing, but i'll get their one day :lol:


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