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Porsche to Boost VW Stake

TSC Staff

In a statement posted on its Web site Saturday, Porsche said it would increase its VW stake to 31% from 27.3%.

By breaching the 30% ownership threshold, Porsche is required under German law to make an offer for all the VW shares it doesn't own, and it announced it would make such an offer.

But spokesman Christian Dau said Porsche wasn't "seeking a majority takeover of Volkwagen," according to The Wall Street Journal, and he added that Porsche didn't expect many shareholders to tender their stock.

Porsche is lowballing its offer price by making it the minimum prescribed by law. The statement said Porsche expects to offer 100.92 euros for each VW ordinary share, which is significantly lower than their Frankfurt closing price Friday of 117.95 euros.

"Porsche does not consider a premium on the minimum price to be appropriate, since the price of the VW ordinary shares has already increased by more than 100% since the Stuttgart-based sports car manufacturer first acquired a stake," the statement said.

In its statement, Porsche mentioned an expected legal change that could open Volkswagen up to potential takeover bids. The so-called VW Act, which limits any single shareholder's voting power to 20% despite the number of shares they hold, likely will be overturned soon because it has been found to be incompatible with European Union regulations.

Once the act is repealed, suitors could buy up shares, and their associated voting power, in an attempt to wrest control of VW. By raising its stake to 31%, Porsche will make that impossible, because the German state of Lower Saxony holds 20% of VW, and together they will have a controlling stake in VW.