Porsche's Stake in Volkswagen Goes to 31%

Washington DC May 3, 2007; The AIADA newsletter reported that Germany's financial regulators have approved automaker Porsche's required takeover offer for Volkswagen, which it was obligated to make after acquiring more than 30% in the company, Porsche said Monday.

Porsche has said it doesn't plan to acquire Volkswagen outright. USA Today reports that Porsche has improved its offer for preferred shares to 65.54 euros each from 65.45 euros. It is still offering 100.92 euros per ordinary share, which is more than 11% below the current market price.

Porsche triggered the mandatory takeover offer by raising its stake in Volkswagen higher than 30% — a move aimed at shielding the automaker from the possibility of a foreign takeover. The offer gives the company the chance to buy Volkswagen shares without making another takeover bid.

A German law that limits Volkswagen shareholder voting rights to a maximum of 20%, no matter how many shares are held, is expected to be ruled unlawful by the European Union. That ruling would have left VW exposed to takeover attempts. But with Porsche now holding 31% of the company and the German state of Lower Saxony a near-20 stake, the carmaker is now shielded.