Porsche Nears VW 'Domination'

28 October 2008

STUTTGART: Luxury sports car marque Porsche has increased its stake in fellow auto-manufacturer Volkswagen to 74.1% - just 0.9% short of a "domination agreement" that will hand it effective control of Europe's largest vehicle maker.

Under German law, Porsche requires a share of 75% in Volkswagen to finalise the "domination agreement", which would then allow it to list VW's assets and revenues in its own books. 

Porsche was already known to be in control of a 35.14% stake in Volkswagen, alongside a further number of previously unreported holdings.

However, only around 5% of remaining VW shares are thought to be available for purchase, making it more difficult for Porsche to increase its overall stake.

A statement from Porsche about the current situation reads: "The target is to raise this to 75% in 2009, so long as the economic conditions permit, and pave the way for a domination agreement."

Volkswagen has recently reported that its sales for the first three quarters of this year are up 3.9%, to a total of 4.8 million units.

VW's chairman Ferdinand Piëch is now said to back Porsche's investment, having reached an agreement with his cousin, and Porsche chairman, Wolfgang Porsche, who also sits on VW's board.

But Bernd Osterloh, who represents VW's labor unions, is apprehensive, saying: "It would be a catastrophe for the more than 360,000 employees of Volkswagen if managers who trample on workers' rights take over control at this company."

Data sourced from Wall Street Journal Online; additional content by WARC staff