The European Union’s highest court has thrown out a German law that was the only thing stopping luxury carmaker Porsche from taking over Europe’s biggest car manufacturer Volkswagen. Under the almost 50-year-old law, Porsche only had limited voting rights regardless of how many shares it owned.
That also meant that Volkswagen’s home state of Lower Saxony could veto any strategic decisions – such as a takeover with its 20.3% of shares. Porsche has a 31% stake in VW and is widely expected to raise that to as much as 51% to effectively take full control.
It has already arranged a ten billion euro credit line for additional share purchases and according to car industry analyst Frank Schwope, Porsche may have used some of that: “I’d assume Porsche, by now, has more than 31% of the shares. Porsche had to declare that 31% and I believe that currently, they have between 31% and 50%, and on top of that, have taken options so they could quickly go over 50%.”
Porsche has been buying shares in Volkswagen for two years with the intention of swallowing its much larger stablemate, but the time scale remains unclear with a decision perhaps being made at a Porsche supervisory board meeting on 12 November. When the court ruling was announced VW’s share price went up, but it later dropped on reports that it is unlikely Porsche would increase its stake before the end of this year.