After purchasing more than 50% of Volswagen shares, Porsche has taken over Volkswagen. Porsche said on Jan. 5 that by buying new VW shares, it "will thus increase its participation to 50.76%" of the group's capital, compared with 42% before.
VW posted sales of 109 billion euros in 2007, while Porsche, which employs 11,600 workers, reported sales of seven billion euros in its 2006-2007 fiscal year.
Porsche had initially planned to acquire more than 50% of VW's stock last year but was forced to delay the operation after the value of the shares soared amid frantic stock market speculation. At one point, they traded for more than 1,000 euros (US$1,350) per share, making VW briefly the biggest company in the world by stock market valuation.
Porsche, which makes the 911 sports car and Cayenne sports utility vehicle, plans to raise its stake in VW to more than 75% this year, with which it expects to gain total control over the group. Having more than 75% would allow it to seal a so-called domination contract giving it full financial control.
In Germany, a minority investor that owns 25% of a company's shares can block strategic decisions, but in the case of VW that level is currently set by law at 20%, the amount owned by the state of Lower Saxony, where VW is based. Porsche has challenged the so-called VW law and has received support from the European Commission, which has threatened to haul Berlin into European court again after a revised version of the law retained the 20% minority blocking threshold.
The IG Metall trade union fears a Porsche takeover would lead to job cuts at German VW plants, despite assurances from Porsche that it is a long-term investor in the auto giant.
Copyright Agence France-Presse, 2009