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Porsche to up VW stake - again

2008-03-04 07:42

Frankfurt - German sports car maker Porsche is set to increase its 31% voting stake in Volkswagen to a majority but does not intend to merge the two carmakers, it said on Monday.

At an extraordinary meeting on Monday, Porsche's supervisory body authorised the long-awaited move, which the maker of 911 sports cars and Cayenne offroaders said would represent an investment of almost 10 billion euros ($15.17 billion).

"Our aim is to create one of the strongest and most innovative automobile alliances in the world, which is able to measure up to the increased international competition," Porsche chief executive Wendelin Wiedeking said.

Lifting its stake above 50% would not require Porsche to make a full bid for VW because it made an offer at the legal minimum price last year which few investors took up.

The German state of Lower Saxony, VW's second-biggest shareholder with around 20% of the votes in Europe's biggest automaker, reiterated it would keep its stake and continue to play an active role as Porsche's partner.

Porsche, controlled by the family of VW Chairman Ferdinand Piech, has long been expected to gain majority control of VW after Europe's highest court last year struck down a German law that capped individual shareholders' voting rights in VW.

Wiedeking said in September that Porsche had acquired enough options to raise its VW stake "significantly" but has not specified whether they would suffice to gain majority control.

It has argued it needs to preserve strong influence at VW - which provides content for a third of the vehicles Porsche sells - to ensure VW does not fall into the hands of unfriendly investors such as hedge finds or private equity houses.

Porsche began building its VW stake in 2005.

In the wake of last year's ruling, the German government is debating a new VW law whose draft version preserves a strong say for VW staff and Lower Saxony, something Porsche is fighting.

Shares in Porsche rose as much as 6% and were up 3.2% at 117.20 euros by 1607 GMT while Volkswagen stock rose 1.5 percent to 152.19 euros.

Porsche said in a statement it had instructed management to start all steps needed to gain regulatory and antitrust approval for the move.

"The reviews by the regulatory authorities are expected to take several months. As soon as the requisite clearances have been obtained, Porsche SE can acquire the majority of the shares in Volkswagen," it said.

"Porsche has positioned its chess pieces in such a way that nothing might happen. They don't need to be in a hurry," said Mirko Pillep, a share market strategist at German bank Helaba.

Juergen Pieper, an analyst at Bankhaus Metzler, said the likelihood of Porsche winning majority control at VW had risen but noted that Porsche still had a free hand after what amounted to a formal step by the supervisory board.

"Everything is still possible. It is also possible that they leave the stake where it is," he said.

VW, which earlier said it was gaining majority control of Swedish truckmaker Scania, was not immediately available for comment.

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