Porsche posts a 4.4 billion euros loss after failed VW takeover bid

A loss of 4.4 billion euros ($6.6 billion) before tax was recorded by Porsche Automobil Holding SE, Porsche AG’s parent company, in the year ending July 31. The year before, it earned 8.6 billion euros before tax. A statement from Porsche SE said that the loss is due to its failed attempt to take over the much larger Volkswagen AG.

The main factor in the loss was a write-down on cash settlement options to VW shares. Porsche said that another factor leading to the loss was the “hidden reserves and liabilities” identified in the course of the purchase price allocation for the shareholding in VW. When Porsche SE was preparing to buy a controlling stake in VW, it amassed more than 10 billion euros in net debt at a time when credit markets froze. Porsche was then required to refinance, forcing VW to extend it an emergency loan and resulting to the reverse takeover.