Last Update on : March 11, 2008
Porsche vies for majority VW stake, market top
 In the long-running saga of Porsche's effort to take control of Europe's largest carmaker, the sports car maker now appears to be maneuvering to more than double its stake of 31 percent in Volkswagen AG, according to the latest report.
The German magazine Focus said in its latest issue that Porsche was considering increasing its holding in Volkswagen, a carmaker 10 times its size by revenues, to 75 percent. Porsche issued a denial Monday, saying that it would be difficult to do that because the state of Lower Saxony controls more than 20 percent of VW's shares.
But Porsche didn't deny wanting a stake of 75 percent, and analysts say a holding of that size would give it a dominant majority and might allow it to override a minority shareholder.
Indeed, Porsche's supervisory board last week cleared the company to acquire a majority stake in VW, and Porsche recently tapped a credit line for $15 billion.
Volkswagen's future lies in the balance as its two leading shareholders fight to impose their vision for the Wolfsburg, Germany-based carmaker. Lower Saxony, where VW is headquartered, is concerned primarily with preserving more than 80,000 VW jobs in the state.
Porsche is concerned with its and VW's long-term competitiveness.
"Porsche's principal reasons for seeking control have to do with long-term developments in the industry, all the emissions regulations coming into force," says auto analyst Juergen Pieper at Metzler Bank in Frankfurt.
The two carmakers also have longstanding historical ties. Porsche's largest shareholder, Ferdinand Piech, is the supervisory board chairman of Volkswagen. His grandfather, Ferdinand Porsche, founder of the sports car firm, designed the original Beetle.
In recent months, Volkswagen executives have said they are targeting Toyota Motor Corp. for industry dominance and profitability. VW recently raised its stake in Swedish truck maker Scania to more than 65 percent.
In approving the acquisition of more VW stock, Porsche explained that it relies on VW for around 30 percent of its auto components and wanted to protect the automaker from a hostile bid. VW had been shielded by a German law preventing any single shareholder from gaining more than 20 percent voting control, effectively giving Lower Saxony veto power over all major decisions. But that law was struck down by Europe's highest court in October.
Now, the German justice ministry is pushing a new bill that would preserve Lower Saxony's role by requiring shareholder approval amounting to more than 80 percent of the outstanding shares to push through major decisions. Such a law would leave VW at a disadvantage to its competitors at a challenging time for the industry.
|
