A corporate David and Goliath scenario was emerging in Germany yesterday as speculation grew that Porsche is planning to take over Volkswagen.
Volkswagen stock hit an eight-year high following Porsche's decision to raise its stake in the larger company from 21.2 to 27.4 per cent on Wednesday. The company has plans to increase its shareholding further to 29.9 per cent. If it acquires more than 30 per cent, it is required to make a bid for the company.
The speculation comes a year after Porsche bought a stake in the company, billed at the time as a strategic partnership to cut costs in sports car production.
In the last 12 months, Porsche manufactured exactly 96,794 cars, while Volkswagen made 5.2 million.
Porsche boss Wendelin Wiedeking said last year that he had "no interest" in a full take-over of Volkswagen. A Porsche spokesman repeated that assurance yesterday.
Porsche's increased stake in the company comes a month before a European Court of Justice hearing on a special law that protects VW from hostile takeovers. The so-called "Volkswagen Law" from 1960 has been a long-running source of disagreement between the European Commission and the German government because it limits outside shareholder voting rights to 20 per cent, even if they hold more of the group capital.
The law effectively gives the state of Lower Saxony, where Volkswagen's headquarters are based, the power to veto any takeover bids. German business media speculated yesterday that Porsche was positioning itself to have first refusal to take control of the company if the law is annulled.
A VW-Porsche deal would be a family affair for the two companies: VW supervisory board chief Ferdinand Piech is a member of the family that owns Porsche, the Stuttgart-based luxury car manufacturer. Mr Piech is a grandson of Ferdinand Porsche, who developed the Volkswagen "Beetle" for Adolf Hitler.
