Porsche to up stake in VW

BY OUR AUTOMOBILES CORRESPONDENT

March 27, 2007: In serious efforts to ward off any potential take over of Volkswagen, the German sports car maker Porsche plans to think and act a step further. The sports car maker has lined up plans to up its stake in Volkswagen to 31 per cent from the current 27.3 per cent.

However, an auto sector report said that Porsche has no plans yet on mounting a full takeover bid. If the car maker is expected to mount an offer for the Volkswagen shares it doesn't already own, it would be because it is obliged to do so, said the report. Significantly, German norms stipulate that a company must make an offer for the remaining shares of a company after acquiring a 30 per cent stake in the firm.

Meanwhile, the report added that Porsche did not expect shareholders to tender into the offer. The sports car major has apparently been deliberate in setting the tender offer very low.

Porsche's move to raise its Volkswagen stake is seen as targeted at securing the existing cooperation agreement. The VW group and its eight brands still have high potential, and Porsche is making an good investment in the VW share, feel analysts.

Another report said that Porsche might create a holding company, which will be a European stock corporation so that it can split its Porsche operational business from its Volkswagen holding.

It is believed, in the meantime, that a full acquisition of Volkswagen by Porsche could help the carmaker in its goal of one day matching the efficiency and profitability of Japan's Toyota Motor Corp, said the report.