Porsche has increased its stake in Volkswagen to 30.9% in a move intended to stop it becoming a target for hostile takeovers. The sports car maker has been buying VW shares for the last year and a half and said it was doing that to protect its partnership with its largest supplier.
Volkswagen’s chairman is Ferdinand Piech whose family controls Porsche.
Once Porsche’s stake went above 30%, under German law it had to launch a takeover bid for the whole company, but its offer price for the rest of the shares is too low to interest the market which holds 48.6% of the shares. Lower Saxony – the region where VW is based – has 20.%%.
Porsche is offering 14% less than the closing price of the shares last Friday; on that basis it said it does not expect the takeover offer to be successful, which is what it wants.
As well as heading off any prospective takeovers, Porsche’s purchase could give it greater control of Volkswagen in the future.
That is because the European Union is likely to force the German government to repeal a law that limits any single shareholder to 20% of voting rights. That law was put in place nearly 50 years ago to ensure VW remained in German ownership.