STUTTGART: German-headquartered Porsche, the world's most profitable car manufacturer, on Tuesday tightened its coils around compatriot Volkswagen, upping its stake to beyond 35% and effectively taking control of Europe's largest automaker.

Porsche, whose luxury sports cars are as coveted as they are pricey, is now required under German company law to make a formal offer for VW's own hot and ritzy marque Audi. Despite which the Stuttgart company has undertaken that it will not take control of the latter.

Porsche has upped its existing stake in VW by a further 4.89% of ordinary shares, bringing  its total holding to 35.14% of the voting rights. Which although much smaller than VW, gives it de facto control of the auto giant.

Porsche ceo Wendelin Wiedeking said his aim is now to lift its stake in VW stake to above 50%, as agreed in March by the Porsche board.

He is seeking cooperation "based on a spirit of mutual trust" and hopes for a speedy deal with unions of the respective companies.

But it may not be a case of "seek and ye shall find", given that the VW works council has repeatedly expressed skepticism at Porsche's maneuvrings to seize control. The workers' hand is also strengthened by the 20%-plus blocking vote held by the German state of Lower Saxony.

This strategic vote is not to the liking of European Commissioner Charlie McCreevy, who last week vowed take the German federal government to the European Court of Justice to overturn the so-called 'VW law' that gives Lower Saxony a blocking vote.

He argues that the vote is illegal under European Union competition rules.

State premier Christian Wulff, who ex officio sits on VW's board, said he did not believe the commission would heed McCreevy's call, opining that the EU cannot interfere in German company law.

VW's broad spread of shareholders, said Wulff, "had thus far benefited" the company. "This tradition will be defended," he declared.

Data sourced from Deutsche Welle (Germany); additional content by WARC staff