Mike Stevens | Jul 13, 2009

THE QATAR INVESTMENT AUTHORITY (QIA) has now formally made an offer to purchase a 25 percent stake in German manufacturer Porsche, offering €7 billion (AU$12.5 billion) for a share of Porsche Automobil Holding and options on Volkswagen shares held by Porsche.

Last week, Porsche's capital-raising efforts hit a snag when the German state-owned KfW bank rejected its request for a €1.75 billion ($AU3.05b) loan to assist it through its current difficulties.

While declining sales of the 911 won't be helping, Porche's problems are largely self-inflicted - a result of its now stalled and ill-advised attempt to steamroll into Volkswagen.

With a €9 billion ($A15.8bn) debt concentrating minds in the Porsche boardroom, with the lucrative US market having slowed to a trickle and production-cuts planned for later in the year, the offer from QIA may be growing in appeal for the bruised iconic sportscar maker.

Sources claim that Qatar has "entered the final stretch". However a standoff with Volkswagen - of which Porsche owns 51 percent and which Volkswagen has now countered with a reported €4 billion (AU$7.16 billion) proposal to buy 49 percent of Porsche's operations - is likely complicating matters.


For it's part, the state-owned Qatar Investment Authority is not short of funds and, while there are bargains to be found in the current global recession, is on the hunt for quality investments. (Oil-rich Qatar also holds a third of the world's reserves of natural gas.)

We will likely hear which way Porsche has decided to jump on, or soon after, July 23rd.

On that day, Porsche's Supervisory Board is to meet to consider the offer by Qatar and Volkswagen's strategic counter-offer proposal.

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