FYI: European Court strikes down VW Law, Porsche takeover now possible

[Gooch1971]

From Autoblog today

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European Court strikes down VW Law, Porsche takeover now possible
Posted Oct 23rd 2007 12:26PM by John Neff
Filed under: Euro, Government/Legal, Porsche, Volkswagen



While Porsche has been gobbling up stake in Volkswagen for about a year, a little piece of legislation called the VW Law has been the only thing preventing the sports car builder from gobbling up the giant German automaker. Currently Porsche holds a 31% stake in VW, but with news today of the European Court striking down the VW Law, many expect the company to quickly increase its stake to a controlling 51%.

The VW Law itself dates back to 1960, and while a bit complicated to understand, basically stipulates that 80% shareholder approval is required to pass major decisions and regardless of how much stake a single entity holds, its voting block cannot be greater than 20%. Since the company's home state of Lower Saxony owns 20.1% of VW, it alone holds the power to influence the company's decision making. Under the VW Law, it has held the power to block any decision that would threaten its jobs and local economy. Thus, Porsche's desire to own a controlling stake in VW has been blocked by Lower Saxony as well as its inability to use the full force of its 31% stake in voting.

Porsche has been very patient so far, and will apparently remain so a little longer. It is not expected to increase its stake in VW before the end of the year, but everyone seems fully aware that today's historic news means that the company will sooner or be controlled by Porsche.

[Source: Automotive News, sub. req'd]

http://www.autoblog.com/2007/10/23/european-court-strikes-down-vw-law-porsche-takeover-now-possibl/
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[Hawktel]

Sounds good to me. I think they can use each other in a good way. Should have happened long ago.

Porsche Phaeton for example. Or no need for the Pepperbox, just a higher end Toureg.

[DanL911sc]

There goes the Veyron...

[ckissick]

That part about Lower Saxony owning controlling interest in VW decision making is the biggest reason for troubles VW might have. After all, The people in charge of Lower Saxony are gov't bureaucrats.

[Mo_Gearhead]

I don't pretend to know the future implications of such an ownership/merger.

My first thought is ...great! If Porsche, through such a plan, can use 'co-mingled' funds from a "subsidiary" to continue to build high performance cars, remain involved in racing, do high tech. R & D, etc., then that's outstanding.
Use VW for the more 'pedestrian' vehicles they are.

But inter-company rivalries, politics, accountants, etc. may confuse the mix and the ability to move in that direction.

There are many that hated to see Porsche resort to building an SUV to assist in cash flow ...hope springs eternal that this may be a positive factor, should it come about.

[JeremyD]

Porsche + Audi racing division would be pretty formidable.

I personally think this could work if they resist the urge to blur company lines.

Keep Porsche = sports / performance

Audi = Luxury/Touring

Volkswagon = basic quality transportation.

SEAT - Basic Transportation - cheap

Skoda - Commercial

Bugatti - Fold

Bentley - Limited production - compete against Rolls.

Lamborghini - Competition to ferrari.