Porsche Delays VW Takeover

Nov. 26, 2008
Luxury automaker says economy is hurting its own sales.

German luxury automaker Porsche pushed back its planned takeover of Volkswagen on Wednesday as it revealed that the global slowdown was hitting hard sales of its own high-priced sports cars. "In view of the current economic climate, it is more and more unlikely that we will achieve the goal this year" of raising its stake in VW from the current 42.6% to more than half, Porsche chief Wendelin Wiedeking said. "Our aim remains to increase our stake to over 50%. . . as quickly as possible. But we have always said that we would not do anything unreasonable," he told a news conference in southwestern Stuttgart. Another factor is the wild swings in VW's share price in recent weeks that resulted from speculation in the run-up to Porsche's takeover. In late October the price of VW shares shot up to 1,005 euros, making the biggest European carmaker briefly the world's most valuable company by market capitalization. "We are not ready to buy VW shares at ridiculous prices," Porsche finance director Holger Haerter said. And, he added: "The global economic crisis and its consequences for the automobile sector must not be forgotten" when considering an increase of Porsche's current stake. The maker of the 911 sports car is said to be aiming for a VW stake of 75% next year, but at Tuesday's price of 255 euros, shares are considered overvalued by many analysts. Haerter painted a bleak picture of the auto industry, saying the effects of slumping sales meant that "a fundamentally healthy parts supplier could become a candidate for bankruptcy from one day to the next." Porsche estimated that its own sales had dropped by 18% to 25,200 vehicles since August compared with the same period a year earlier. Sales were also expected to have lost 15% to "slightly more than 2 billion euros" or US$2.6 billion, the car maker said. Porsche now expects full year 2008/2009 sales to be "markedly" lower than the previous year's record of 98,650 vehicles. Copyright Agence France-Presse, 2008

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