Porsche Seeks Full Control of Volkswagen

Implications: The Porsche AG founded a new corporate entity in the legal form of a Societas Europaea (SE), the Porsche Automobil Holding SE, which got registered in November. According to Porsche CEO Wendelin Wiedeking the registration of the Porsche Automobil Holding SE was a prerequisite for Porsche to enhance the stake in Volkswagen. Another hurdle taken…

Analysis: Back in March, Porsche CEO Wendelin Wiedeking denied any ambition to gain control of Volkswagen. But recent statements which the CEO made in interviews have led to speculations regarding the fate of the German vehicle manufacturer.

In March, when Porsche was about to increase its ownership of the group from 27.3 % to 30.9 % the luxury carmaker said it did not plan to acquire Volkswagen outright but rather to shield the Lower Saxon company from the possibility of a foreign takeover attempt. This made perfect sense given that the European Union is going after the Volkswagen law providing that no shareholder can have more than 20 % voting rights regardless of the economic stake actually taken.

On October 23 the ECJ ruled against the Volkswagen law, upholding a European Commission claim that Germany has prevented the free movement of capital. Germany is now obliged to abolish the law or amend it respectively.

According to media reports in Germany, the sports car manufacturer Porsche is already buying options that would enable it to boost its stake in Volkswagen from 30.9 % to over 50.0 %. After the completed bidding process which increased its stake to over the 30 % mark, Porsche will only be required to again publicise the extent of its stake in Volkswagen if an when it crosses the 50 % mark. Brokers said they expect Porsche to cross that line early next near. But even if Porsche acquires enough options this year already this doesn’t mean that Porsche is going to enhance its stake in Volkswagen straight away. Experts expect the increase of the shares held by Porsche not before the coming election of the state parliament in Lower Saxony scheduled for January 27.

Under German law Porsche is not required to publish another mandatory offer when increasing its stake in Volkswagen over the 50% threshold and thus acquiring the control of Volkswagen AG.