Porsche to grab 75 per cent stake in Volkswagen
27 October 2008

Porsche has announced that it has increased its stake in Volkswagen Group to nearly 75 per cent, an amount which will allow the sportscar maker to gain full control of VW’s cash flow.The announcement helps to explain why Volkswagen’s share price has been fluctuating wildly in recent weeks. The German state of Lower Saxony still owns 20 per cent of the company which, alongside Porsche’s increased holding, means that only around five per cent of VW shares are still in ‘free float’.Under German law, taking a 75 per cent stake will allow Porsche to impose a ‘Domination Agreement’, allowing it to put Volkswagen’s assets and revenues onto its balance sheets. Porsche has stated that it intends to reach this figure sometime next year. Volkswagen says that it continues to welcome Porsche’s investment, but unions representing the group’s German employees remain bitterly opposed to the takeover, which they fear will lead to cuts and a shift of production capacity to lower cost countries.

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27 October 2008

Not convinced this is the best use of Porsche corporate funds when they are likely to face a tough trading period over the next 1-3 years.

They already had a healthy shareholding within VW, that prevented a third party from undertaking a takeover.

To takeover VW themselves is probably not a good idea, I don't think the Porsche corporate culture is a comfortable fit with that of a large mass market car manufacturer like VW. It's one thing to make the occasionaly car for the VW group another matter altogether to actually run it.

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