The German state of Lower Saxony has bought 500,000 more Volkswagen shares to maintain its stake in the biggest European car maker about 20%, a statement said June 18. "Lower Saxony wants to preserve its minority blocking" position, a spokesman said.
Lower Saxony is the second-biggest VW shareholder behind sports car maker Porsche, which owns around 31% and has said it wants to acquire a majority holding at some point.
The state was obliged to increase its holding after VW distributed around three million stock options to workers, the regional finance ministry said. If those workers exercised their options, the state's holding would fall below 20%, depriving it of a veto over strategic decisions at the auto company, which is based there. VW statutes require such decisions to be approved by at least 80% of its shareholders, compared with 75% in most other German companies. That provision has been opposed by Porsche and the European Commission, but is firmly backed by Lower Saxony, the German federal government and trade unions.
In October a EU court struck down a German law that contained the provision but the German government has since drafted a new law it says respects the EU ruling, while maintaining the minority blocking level at 20%.
Copyright Agence France-Presse, 2008