Porsche seeks clearance to raise VW stake to 25.1 percent
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queryvar="porsche,seeks,clearance,to,raise,vw,stake,to,251,percent";Reuters / June 23, 2006 - 7:00 am UPDATED: 6/23/2006 11:15 A.M.
FRANKFURT -- Porsche has sought German antitrust authority clearance to raise its voting stake in Volkswagen to a blocking minority of 25.1 percent, Porsche said on Friday.
Raising its stake from 21.2 percent now would increase its influence on decision-making at Europe's biggest carmaker, in which it became the largest single shareholder last year.
"The Stuttgart company expects quick approval of the plan from the cartel authorities. As soon as this happens, Porsche could conduct the planned increase in its stake," it said, adding it had not yet decided when it would boost its stake.
As long as the so-called Volkswagen Law exists, however, individual shareholders are not permitted to exercise more than 20 percent of the voting rights, although the European Commission is in the process of challenging that German law.
The law has been seen as a major hurdle that helped to prevent a takeover of VW, but Porsche has said that it expects it to be overturned.
Should Porsche exercise its option to acquire a further 3.9 percent of Volkswagen shares, seen almost as a certainty, analysts say the move would likely put an end to any speculation that Volkswagen will be a takeover candidate.
CLEAR POWER STRUCTURE
"That's what this probably means, although speculation has dropped down anyway, particularly since at this level it would be hard for a bidder to justify the price," said Landesbank Baden-Wuerttemberg analyst Stephan Droxner.
He thought Porsche would have the funds to build a majority stake of 51 percent in VW, but German law would then require Porsche to make a takeover offer to remaining shareholders.
"They would then have to find a strong financial partner to mount such a bid, but this is highly unlikely unless, for example, VW incurs major problems with its restructuring plans," Droxner said.
Porsche last year signaled its intent to raise its VW stake by acquiring an option to buy additional shares. The overall investment would then total $4.38 billion (3.5 billion euros).
Porsche says its VW stake ensures stable ties with a company that supplies content for 30 percent of Porsche's sales volume. They cooperate on the Porsche Cayenne and VW Touareg offroaders, hybrid technology and Porsche's new Panamera four-door car due in 2009.
But critics say Porsche's stake poses a conflict of interest, especially for VW Chairman Ferdinand Piech, whose family controls Porsche.
"This would make the structures of power and hierarchy clearer at VW, and you could not wish for a better big shareholder in the car industry than Porsche," said Bankhaus Metzler analyst Juergen Pieper. "This can only be positive."
queryvar="porsche,seeks,clearance,to,raise,vw,stake,to,251,percent";Reuters / June 23, 2006 - 7:00 am UPDATED: 6/23/2006 11:15 A.M.
FRANKFURT -- Porsche has sought German antitrust authority clearance to raise its voting stake in Volkswagen to a blocking minority of 25.1 percent, Porsche said on Friday.
Raising its stake from 21.2 percent now would increase its influence on decision-making at Europe's biggest carmaker, in which it became the largest single shareholder last year.
"The Stuttgart company expects quick approval of the plan from the cartel authorities. As soon as this happens, Porsche could conduct the planned increase in its stake," it said, adding it had not yet decided when it would boost its stake.
As long as the so-called Volkswagen Law exists, however, individual shareholders are not permitted to exercise more than 20 percent of the voting rights, although the European Commission is in the process of challenging that German law.
The law has been seen as a major hurdle that helped to prevent a takeover of VW, but Porsche has said that it expects it to be overturned.
Should Porsche exercise its option to acquire a further 3.9 percent of Volkswagen shares, seen almost as a certainty, analysts say the move would likely put an end to any speculation that Volkswagen will be a takeover candidate.
CLEAR POWER STRUCTURE
"That's what this probably means, although speculation has dropped down anyway, particularly since at this level it would be hard for a bidder to justify the price," said Landesbank Baden-Wuerttemberg analyst Stephan Droxner.
He thought Porsche would have the funds to build a majority stake of 51 percent in VW, but German law would then require Porsche to make a takeover offer to remaining shareholders.
"They would then have to find a strong financial partner to mount such a bid, but this is highly unlikely unless, for example, VW incurs major problems with its restructuring plans," Droxner said.
Porsche last year signaled its intent to raise its VW stake by acquiring an option to buy additional shares. The overall investment would then total $4.38 billion (3.5 billion euros).
Porsche says its VW stake ensures stable ties with a company that supplies content for 30 percent of Porsche's sales volume. They cooperate on the Porsche Cayenne and VW Touareg offroaders, hybrid technology and Porsche's new Panamera four-door car due in 2009.
But critics say Porsche's stake poses a conflict of interest, especially for VW Chairman Ferdinand Piech, whose family controls Porsche.
"This would make the structures of power and hierarchy clearer at VW, and you could not wish for a better big shareholder in the car industry than Porsche," said Bankhaus Metzler analyst Juergen Pieper. "This can only be positive."
