State gov't holds on as Porsche aims to strip its power
Porsche is embarking on a collision course with the government of Lower Saxony. The German state in which Wolfsburg, where VW is based, holds a 20.1% interest in the Volkswagen Group. But Porsche, which currently holds 31% of the company and is aiming to acquire majority interest, is on a campaign to reduce the influence of the state government on the auto giant's governance.
While most decisions at most companies require a 50% plus one majority, or possible a two-thirds majority for major issues, Volkswagen's regulations stipulate that "significant decisions" need to be approved by an overwhelming 80% +1 in order to pass, essentially giving the state government a veto over any major decisions to be undertaken by the company's shareholders. While a ruling handed down by the European Court of Justice mandated that certain laws put in place to protect Volkswagen from a hostile take-over were illegal, the governor of Lower Saxony insists that its 20% +1 blocking power was perfectly legal and that his government would oppose Porsche's proposal to amend the regulations.
[Source: Detroit News]
Reader Comments (Page 1 of 1)
Pan 8:08AM (4/10/2008)
DENIED.
But wtf this is messed up, if anything .. the government will only sell off when it's done with milking porsche.
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993C4S 11:15AM (4/10/2008)
Not a chance. The reason for their voting power is to protect the jobs and plants that currently exist in the state of Lower Saxony. I don't agree with the regulation at all, but the chance of Lower Saxony "selling off" is zero (unless of course Porsche contractually agrees to keeping jobs at a certain number and wage).
Ubizzle 8:32AM (4/10/2008)
Good on Wolfsburg, but i hope for VW's sake that it makes decisions for the good of VW, not to either spite porsche or to just make some money.
If it is looking out for the company's best interests, I am in full support of them keeping a 20.1% stake. Means Porsche won't get their own way and potentially get rid of VW's best assets, or even devalue them by stopping them producing certain models.
I also hope Porsche don't get anyone on Audi's board, they don't deserve to ruin Lamborghini for their own sales.
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geo.stewart 8:55AM (4/10/2008)
basically what's being said though is "Even though I'm not a majority stockholder and represent the most to lose or gain, I dont care what the majority wants"
There is a bit of ambiguity in "major decisions" I would expect that the gov't is most concerned with a move of the hq and factories or a sell off of the company, but at the same time to have a majority stockholder-type strangle hold on the company with only 20% of the stock is in bad form.
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Avinash machado 9:02AM (4/10/2008)
Imagine if Michigan state held 20% of the shares in the Big 3 maybe they would be more eager to help them and might even have been able to prevent Daimler-Benz from buying Chrysler.
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Dinger 10:22AM (4/10/2008)
With the way Michigan is run all 3 would have closed up shop years ago.
DomManganelli 11:40AM (4/10/2008)
have you seen the potholes contest? i thought boston was bad
mk 11:10AM (4/10/2008)
State influence on private business is a BAD deal whenever it is tried.
The state has different purposes and goals than a private corporation.
Cooperation should happen where the state and corporate interests meet, but states shouldn't be "shareholders". That makes decisions and organizations beholden to government.
Socialism fails every time it is tried, even if it sounds good at the beginning, it eventually leads to downfall.
Sorry to bring up a sore spot of history, but Germany should know that lesson better than almost anyone, they have learned it the HARD way.
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wushu 2:30PM (4/10/2008)
The EU should force Porsche AG to divest at least its shares of Audi, if not all of its shares of VW, in order to increase fair market competition. Porsche AG has made a number of anti-competitive decisions that are bad for consumers. For one, not only does Porsche refuse to make a Cayman with more horsepower, but Porsche management killed the 6-cylinder version of the Audi R8 so that no one else can a more powerful more affordable mid-engined car. This one example is enough to make me refuse to buy any Porsche and to tell all my friends, family, and co-workers to boycott Porsche due to its unfair practices.
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