Shares skyrocket as Porsche takes over Volkswagen
FRANKFURT (AFP) - - German luxury sportscar maker Porsche has taken over Volkswagen, the biggest European car manufacturer, after purchasing more than 50 percent of VW shares, Porsche said.
Porsche said in a brief statement late Monday that by buying new VW shares, it "will thus increase its participation to 50.76 percent" of the group's capital, compared with 42 percent before.
The news sent Volkswagen shares rocketing up 13.48 percent in early afternoon trading on the Frankfurt stock market on Tuesday.
The takeover by a family-run company run by billionaire shareholders has been a culture shock for Volkswagen, a sprawling national institution seen as a model for cooperation between shareholders and unions.
Porsche launched its takeover bid in 2005, saying it would turn Volkswagen into a "normal" enterprise and incurring fierce opposition from the unions.
Porsche had initially planned to acquire more than 50 percent of VW's stock last year but was forced to delay the operation after the value of the shares soared amid frantic stock market speculation.
At one point, they traded for more than 1,000 euros (1,350 dollars) per share, making VW briefly the biggest company in the world by stock market valuation.
On Monday, VW shares closed at 254.74 euros, close to the range Porsche had set for itself of between 200-250 euros.
VW said in August that it had overtaken Ford to become the world's third biggest automaker behind General Motors and Toyota.
Porsche is now obliged by Swedish law to make an offer for outstanding shares in truckmaker Scania, in which VW is the dominant shareholder.
But Porsche will offer a minimum price for Scania shares and has no "strategic interest" in the company, the statement said.
Porsche, which makes the 911 sports car and Cayenne sport utility vehicle, plans to raise its stake in VW to more than 75 percent this year, with which it expects to gain total control over the group.
Having more than 75 percent would allow it to seal a so-called domination contract giving it full financial control.
In Germany, a minority investor that owns 25 percent of a company's shares can block strategic decisions, but in the case of VW that level is currently set by law at 20 percent, the amount owned by the state of Lower Saxony, where VW is based.
Porsche has challenged the so-called VW law and has received support from the European Commission, which has threatened to haul Berlin into European court again after a revised version of the law retained the 20 percent minority blocking threshold.
Porsche built up its stake in the much bigger VW through the use of stock options that allowed it to catch markets by surprise last year with the size of its holding.
VW's works committee is wary of the takeover however and of Porsche boss Wendelin Wiedeking, who has crossed swords with trade unions, which are extremely powerful at VW.
VW posted sales of 109 billion euros in 2007, while Porsche, which employs 11,600 workers, reported sales of seven billion euros in its 2006-2007 fiscal year.
The IG Metall trade union fears a Porsche takeover would lead to job cuts at German VW plants, despite assurances from Porsche that it is a long-term investor in the auto giant.
Shares skyrocket as Porsche takes over Volkswagen - Yahoo! Singapore News