Porsche Increases Stake Denies Reports of Full Takeover

by : Benjamin Hudson



Porsche has once again increased its stake at Volkswagen-Europe's largest automaker and manufacturer of . And the auto industry is anxiously waiting anytime soon for the announcement of a takeover. But boy will they be disappointed since Porsche has ruled out the possibility of a full takeover of Volkswagen this was according to an official announcement that was recently given by the German sports car manufacturer.

Porsche said that despite of the fact that it has raised its stake in Europe's largest automaker to 30 percent still it wants to make it clear that it wants is to protect Wolfsburg-based automaker from any type of hostile bid.

The German sports car manufacturer also plans to launch the compulsory offer at â‚?35 billion (?23.7 billion) or â‚?100.92 per share which is rather below the opening price that Volkswagen obtained recently of â‚?114.1. Analysts also expect Porsche to slowly increase its holding above 50 percent.

Porsche purchased the additional stake at Volkswagen after the European court of Germany repealed the so-called Volkswagen Law which limits the shareholder's voting rights to 20 percent regardless of whether they own a large stake at Volkswagen.

After news came out that Porsche would possibly takeover of Volkswagen, Wolfsburg-based carmaker's shares decline by $3.3 closing at â‚?114. The decline in Volkswagen shares was the opportunity which analysts were saying that would allow the sports car group to purchase even more shares at Volkswagen at a cheap price.

Due to the sudden decline in Volkswagen shares the Deutsche Bank has lowered its recommendation on Volkswagen from "hold" to "sell".

Despite Porsche's claim that it will not go for a full takeover but many are still doubtful of its real intentions. And hopefully it won't have any adverse effect on Volkswagen's sales output. It should be noted that the two carmakers have become increasingly connected, driven by the companies' connection with Ferdinand Piech who happens to be the grandson of Porsche's founder Ferdinand Porsche and chairman of Volkswagen.