German carmaker Porsche announced Tuesday, Sept. 16, it had increased its stake in Volkswagen to above 35 percent, taking an effective controlling stake in Europe's largest carmaker.
Driving force: Porsche's increased stake makes it the main player at VW
The highly profitable luxury sports car and sports utility vehicle maker simultaneously pledged that it would not attempt to seize control of VW's subsidiary, Audi, even though under German company law Porsche has to make a formal mandatory offer for Audi.
Porsche said from its Stuttgart headquarters that it had bought a further 4.89 percent of VW ordinary shares taking its total stake in the Wolfsburg-based carmaker 35.14 percent of the voting rights.
This gives de facto control through a voting majority at VW general meetings and makes VW formally a subsidiary of the much smaller company.
Porsche Chief Executive Wendelin Wiedeking said his aim was to take the VW stake to above 50 percent as decided at a Porsche board meeting in March.
Wiedeking said he aimed at cooperation "based on a spirit of mutual trust" and that he hoped for a quick resolution of the conflict between the workers' representatives at the two companies.
Skepticism at VW over Porsche move
Porsche's David will effectively run the VW Goliath
The VW works council, in which the German state of Lower Saxony holds a blocking vote of just over 20 percent, has long expressed skepticism at moves by Porsche to take control.
Tuesday's share purchase compels Porsche to make an offer for Audi, but Wiedeking insisted this was purely a legal formality.
"We regard Audi as an integral part of the Volkswagen group and have no interest in removing the company from the group structure," he said.
VW owns 99.14 percent of Audi shares and has indicated it will not accept the mandatory offer of about 487 euros ($693) a share.
Last week, European Commissioner Charlie McCreevy said he would take the German federal government to the European Court of Justice to get the so-called "VW law" that gives Lower Saxony a blocking vote overturned on the grounds that it infringed European Union (EU) competition law.
Porsche has also called for the repeal of the law.
VW confident of riding out EU turbulence
Wulff: Fighting talk
Lower Saxony Premier Christian Wulff, who as the state's head sits on VW's board, said he did not believe the commission would heed McCreevy's call, as the EU could not interfere in German company law.
Wulff said VW's broad spread of shareholders "had thus far benefited" the company. "This tradition will be defended," he added.
The European Commission first objected to the law, which dates back to VW's privatization in 1960, in 2004, and the European Court of Justice ordered the German federal government to amend the law.
In May this year, Berlin put forward an amended law that McCreevy has rejected, as it maintains the 20-percent blocking minority for Lower Saxony.