Volkswagen Open to Takeover After Legislators' Cave-In

15 February 2007

WOLFSBURG, Lower Saxony: Volkswagen, an icon of all things Germanic since its conception seven decades ago in the melting pot of National Socialism, is for the first time in its chequered history open to takeover.

Protected from overseas and local predators by the legal shackles of a blocking stake owned by its home state of Lower Saxony, VW was invulnerable to takeover.

But this week the state - Volkswagen's second largest shareholder after the Porsche dynasty, whose founder Ferdinand created the original VW at the behest of Adolf Hitler - dropped its longstanding opposition to the ceding of control.

The state's cave-in coincided with (or was motivated by) Tuesday's ruling by the advocate general to the European Court of Justice that the law under which the blocking stake is held is anticompetitive and therefore illegal.

VW's current chairman, Ferdinand Piëch, is also the controlling shareholder of Porsche AG which currently owns 27.4% of VW. Insiders say the latest development opens the door to Porsche upping that stake to an impregnable 29.9%.

The percentage is significant in that it places control of VW in Porsche's hands without the inconvenience and swingeing cost of mounting a full takeover bid.

A situation much to the distaste of the company's institutional shareholders who feel they have been deprived of a potential killing.

Data sourced from Financial Times; additional content by WARC staff