After Porsche moved to increase its ownership in Volkswagen to 51 percent last week, an overzealous German magazine took it one step further over the weekend by reporting that Porsche was going for an even larger piece of the pie... a whopping 75 percent. Porsche pulled in the reigns and quickly released a statement today denying the action, pointing out that such a move, "...overlooks the realities in VW's shareholder structure." For now, there is apparently no truth to the published reports that Porsche is going to continue gobbling up Volkswagen.
Maybe so, but analysts have pointed out in the past that the most economically advantageous position for Porsche is if it can get its hands on Volkwagen's multiple sources of income through a so-called "domination and profit transfer" agreement. Such an agreement usually requires owning - what do you know? - a 75 percent stake in a company. Interesting.
The enthusiast-oriented Porsche has said it needed ownership in Volkswagen to prevent the automaker from falling into unfriendly hands (roughly 30% of the parts used in Porsches come from VW, so it's just protecting its component parts sugar daddy). Meanwhile, Lower Saxony, the second biggest shareholder of VW at some 20% with some serious veto power, has the power to block any maneuver that jeopardizes the 82,000 VW jobs in its state. Stay tuned, this isn't the end of it.
[Source: International Herald Tribune]
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Reader Comments (Page 1 of 1)
FThorn @ Mar 11th 2008 8:04AM
< crickets >
rgseidl @ Mar 11th 2008 9:23AM
The German federal justice minister is trying to salvage the portions of the infamous Lex VW that the EU's highest court didn't explicitly overturn in its recent verdict. In particular, it chose not to invalidate the clause that gives a minority of 20% of outstanding shares veto rights on major decisions like plant closures. Common but so far not legally binding practice is a threshold of 25% and, the verdict noted that the 20% limit was at variance with that. HHNN.
The EU's competition commissioner has already indicated she would sue Germany again if a new version of the law effectively gives one particular shareholder - the state of Lower Saxony - rights not enjoyed by minority shareholders in VW's competitors. There's a good chance Germany would lose such a case, though it would take years before the court reached a verdict.
Porsche might well be prepared to buy Lower Saxony's shares, but so far, its politicians are not prepared to sell. On the other hand, they're not interested in raising the state's stake to above 25%, either.
993C4S @ Mar 11th 2008 9:58AM
>>verzealous German magazine took it one step further over the weekend by reporting that Porsche was going for an even larger piece of the pie... a whopping 75 percent.
993C4S @ Mar 11th 2008 10:07AM
Not sure what happened above as my comment got cut off.
What I was trying to say, was that I find this post funny. So much of what is claimed that Porsche is going to do is only so much speculation, but it gets reported as if it were fact.
We all need to remember that just because it is on the internet doesn't make it true. Everyone would love to get a great story/scoop, but until Porsche comes out with an official notification, you just dont' know what's going to happen.
Personally, I think it makes sense from a financial aspect for Porsche to raise their ownership stake. Will the Porsche board and VW board think the same thing? Who knows? More importantly with the state of Lower Saxony allow it, as they obviously want to protect jobs at the existing plants.
ed @ Mar 11th 2008 2:46PM
Its funny to see the largest German carmaker fall in Austrian hands (Piech/Porsche family).
montoym @ Mar 11th 2008 7:46PM
Why?? It was basically started by Porsche in the first place. Plus, the company's headquarters are in Zuffenhausen in Germany. Just the families are Austrian.
I'm not sure I see the point of your post.
ed @ Mar 12th 2008 2:53PM
I racall when Daimler boght Chrysler and all those promises how the Germens will dominate the US market. now their largest carmaker has fallen in foreign hands.
just being a little spiteful here, nothing more ;-))