Porsche Taking Over Volkswagen: the Continuing Saga
The rumor about Porsche taking over Volkswagen is one of the longest enduring controversies in the auto industry. And with the additional shares purchased by Porsche at the Wolfsburg-based automaker will further strengthen the speculation of the rumored takeover. But how true is it?
Despite the additional shares purchased by Porsche at Europe’s largest automaker a takeover is surprisingly has never been the objective of the German sports car manufacturer.
The shares of Volkswagen, Europe’s largest automaker and producer of the popular range of VW head gaskets had rose and close at 5.24 euros ($6.96) or 6.5%, to 83.90 euros ($111.52) higher on Friday, after a report from Germany’s Manager Magazin stating that members of Porsche’s controlling Piech and Porsche families have purchased a third of Volkswagen’s preference shares which means that they had likely gone higher than the 30% limit set by the German corporate law for the initiation of a full takeover.
But despite the announcement from Porsche that they will not be taking over Volkswagen, some analysts still believe that the families which include VW’s chairman Ferdinand Piech have or will go beyond the set ceiling anytime soon.
According to Roman Mathyssek, Global Insight’s senior automotive analyst, “The cost benefits of increasing the stake in Volkswagen are doubtful at the moment. This has to do very little with logic and that’s why nobody believes it. From an industrial point of view there might be a good argument for the two companies to develop more products together, but you can do all that without increasing the equity stakes.â€
The earlier purchase of the 20% stakes of Porsche at Volkswagen in the year 2005 was viewed by most analysts as a defensive move geared at safeguarding Europe’s largest automaker from any type of foreign takeover by hedge funds or by the likes of US corporate raider Kirk Kerkorian, who is a billionaire and president/CEO of Tracinda Corporation.
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