Porsche Closes In On VW

                                                                                         

Porsche AG started substantially increasing Volkswagen AG stake in 2005. From five percent, the stake increased to 20. Two and a half years after, the Stuttgart-based sports car maker intends to amass a majority stake in VW. The green light was given by the supervisory board Monday and the steps necessary are soon to follow.

Wendelin Wiedeking, Porsche chairman, has been given authority to initiate the steps to get regulatory and antitrust support for the acquisition. "Our aim is to create one of the strongest and most innovative automobile alliances in the world, which is able to measure up to the increased International competition," Wiedeking said.

Porsche has been moving rapidly to get controlling interest at Wolfsburg-based automaker. At present, it holds a 31 percent voting stake in Europe’s largest automaker. But majority stake could be had shortly via the $16.2 billion deal. Porsche said, however, it will stop short of merging the companies.

Monday's decision became possible after the European Union's highest court struck down the Volkswagen law. The legislation limited individual shareholders' voting rights in the company to just 20 percent, no matter how much they owned, to discourage hostile and foreign takeovers, Businessweek reported.

Porsche has historical ties to VW. The two automakers have longstanding links which can be reckoned back to the 1930s, with Porsche designing the first VW. The company founder Ferdinand Porsche invented the VW Beetle. His descendants still control VW. Ferdinand Karl Piech, the grandson of Porsche founder, is the chairman of VW's supervisory board.

Separately, the manufacturer of the famed Volkswagen Jetta parts also announced Monday that it is acquiring a controlling interest in Scania, a Swedish truckmaker. As a direct consequence, VW will become the largest truck manufacturer in Europe.

VW said it had purchased a 31 percent stake in Scania. “Our aim is to create one of the strongest and most innovative automobile alliances in the world, which is able to measure up to the increased international competition,” Wiedeking said of the larger acquisition stake.

"As soon as the requisite clearances have been obtained, Porsche can acquire the majority of the shares in Volkswagen,” the automaker said.

Andrew Lonnenberg, an analyst at ABN Amro, told the Australian News that while he did not believe that Porsche would run into any regulatory hurdles, the company still needed to satisfy unions that their workers would be adequately represented on the supervisory board.

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Anthony Fontanelle is a 35-year-old automotive buff who grew up in the Windy City. He does freelance work for an automotive magazine when he is not busy customizing cars in his shop.


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