Carveout should unlock value

Article Excerpt

VOLKSWAGEN AG is a hold. The German automaker (Manufacturing sector; Shares outstanding: 5.0 billion [preferred and common]; Market cap: $177.6 billion; Dividend yield: 3.8%; Takeover Target Rating: Medium; www.volkswagenag.com) has its main listing on the Frankfurt Stock Exchange, but it also trades on the U.S. over-the-counter market under two symbols: VWAGY, $20, representing Volkswagen common shares; and VWAPY, $15, representing the preferred shares. The company now plans to sell a 25% stake in its Porsche unit to the public. The IPO for this luxury sports cars business will be split equally between preferred shares and ordinary shares. Only the preferred shares will be listed. The offering will help Volkswagen unlock value—the Porsche IPO could raise an amount equal to more than half of the parent company’s current market cap. Still, Volkswagen’s short-term outlook remains challenged as rising inflation and interest rates threaten new car sales. Volkswagen is a hold. hold…