We haven't heard about the Volkswagen Law in a while, but that doesn't mean the EU Commission has forgotten about it. The law gives the state of Lower Saxony, with a 20.1-percent stake in VW, veto rights on a takeover deal, which means no one's ever going to take over VW because its home state won't allow it. The law came in handy when Porsche was working to gobble up Volkswagen. The law was struck down by the EU Court of Justice in 2007. Germany then scrapped the old VW Law but rewrote another
With present economic conditions shrinking Porsche's available cash, the automaker may have to adjust or delay its plans to gain full control of Volkswagen. In January, Porsche raised its stake in Volkswagen to 50.76% gaining a majority stake. The Stuttgart-based automaker wants to purchase more of VW, but it stressed that economic conditions must support the move.
Dr. Wolfgang Porsche, the head of Porsche Holding, and Porsche's group works council chairman Uwe Huck took time to answer Porsche staff questions about the impending takeover of VW. It appeared to go well enough: Wolfgang said the Porsche and Piech families met, and Ferdinand Piech, the head of VW, "clearly stated that he unreservedly supports the course of Porsche Automobil Holding SE in all points and is fully and entirely behind the chairmen." It was also said that Piech did not support the
In the land of mergers and acquisitions, there are takeovers, there are hostile takeovers, and then there are I'm Gonna Git You Sucka No Matter What takeovers. Porsche's increasingly acrimonious battle to swallow VW is becoming that third option, and the brawl might threaten the short term plans of Porsche, VW and Audi. Porsche wants access to Audi engines and electronics, but VW, which owns more than 99-percent of Audi, won't allow it.
A procedural glitch, as opposed to Berlin-based intrigue, has postponed Porsche's plan to take over Volkswagen. The EU Commission requires a company to have a controlling interest in a company, or at least an agreement for such, before it will consider a company's application for regulatory approval. To straighten things out, Porsche has raised its stake in VW from 30.6 percent to 35.5 percent, which effectively grants it control of the much larger carmaker.
The Volkswagen Law is doing its best impression of Lazarus -- or perhaps a better analogy would be whack-a-mole. The European Court and minority VW shareholder Porsche keep trying to kill it, but it keeps popping up. Now the German government has agreed on an altered VW law -- but one that still gives the state of Lower Saxony, with it's 20.1-percent holding, blocking minority power.
The so-called "VW law" was struck down by the European Court last October. Previous to that, the state of Lower Saxony was able to veto any Volkswagen shareholder action it didn't like. When the law was struck down it looked like the Lower Saxony had no choice but to watch Porsche, which had been circling shark-like around Volkswagen for a bit, decide on the day it chose to take majority control of the much larger company.
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