Date registered: Sep 2004
Vehicle: 1985 500SEC, 1991 190E 2.6.
Location: Los Angeles / Hannover Germany
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Porsche to raise stake in Volkswagen
By DAVID McHUGH, AP Business Writer
1 hour, 13 minutes ago
Luxury automaker Porsche said Saturday it plans to raise its stake in Volkswagen AG to 31 percent and trigger a mandatory bid for the whole company, in an effort to prevent a foreign takeover of the historic German auto giant.
Porsche said in a statement that its management board authorized the move to raise the company's stake from its current 27.3 percent. Taking a 30 percent stake triggers a mandatory takeover bid under German law.
Porsche said the move came in part as a response to fears that European Union judges will force the German government to repeal its law blocking a foreign takeover of Volkswagen, which is partly owned by the state of Lower Saxony and is seen as both an industrial powerhouse and a major provider of jobs.
"Background for the raising of the stake to over 30 percent is also the expected case of the VW law," the statement said. It cited the opinion Feb. 13 opinion of EU Advocate General Damaso Ruiz-Jarabo Colomer, who said the German government's stance was "not based on overriding reasons relating to the public interest."
The EU took Germany to court over the issue in 2005; the advocate's opinions are not binding on EU judges but the union's highest court follows them roughly 80 percent of the time.
Porsche said it assumed "that the European Court of Justice would confirm the invalidity of the VW law and so cause the German government to change or abolish this law."
If successful, the takeover would create a new combined automotive giant in Europe under the sway of Volkswagen's board chairman and former CEO, Ferdinand Piech, whose family controls Porsche.
He is the grandson of Ferdinand Porsche, the designer of VW's original Beetle model, and the Porsche and Piech families own more than half of Porsche's stock and voting shares.
"The mandatory offer will be made to all VW shareholders after the 30 percent voting rights threshold is exceeded," the company said in a statement, adding that it planned to offer $134.50 per share, the minimum price prescribed by law.
It said it did not want to pay a premium for the takeover because VW shares had already risen strongly since Porsche first took a stake in the company.
"Porsche does not consider a premium on the minimum price to be appropriate, since the price of the VW ordinary shares has already increased by more than 100 percent since the Stuttgart-based sports car manufacturer first acquired a stake and the price of the VW preference shares has almost quadrupled," the company said.
Once the offer is complete, the new company will be converted to a European stock corporation, or SE, and will have its headquarters in Stuttgart, Porsche said.
A key question is the attitude of the state of Lower Saxony, Volkswagen's second-largest shareholder.
Lower Saxony governor Christian Wulff issued a statement that seemed to endorse the current shareholder structure but did not approve or reject a takeover. "Given the global demands, it is a blessing that Volkswagen has two dependable and stable shareholders in Porsche and the state of Lower Saxony," the statement said.