The increase would give Porsche a "blocking minority" stake in VW, protecting VW from a hostile takeover bid, and ensuring stability at Porsche's major supplier. VW provides components for nearly a third of Porsche vehicles, including the upcoming Panamera.
The Porsche move is a pre-emptive strike. Previously, VW had been protected from takeover bids by the German "VW Law," which prevents any shareholder from exercising more than 20 percent of their voting rights, regardless of their holdings. The European Union is likely to overturn the law, once again exposing the automaker to possible takeover bids.