German luxury sports car maker Porsche said Sunday it plans to take a roughly 20-percent stake in Europe's biggest auto manufacturer, Volkswagen, in a move that will help shield VW from a hostile takeover.
Porsche's CEO Wiedeking says he's seeking a 'German solution'
"Porsche AG in Stuttgart plans to buy about 20 percent of the voting shares in Volkswagen AG in Wolfsburg," the company said in a statement.
"Porsche is taking this decision because Volkswagen is now not only an important development partner for Porsche, but also a significant supplier for approximately 30 percent of Porsche's sales volume."
Porsche has developed in partnership with VW the 4x4 vehicle Cayenne and is also collaborating on a hybrid motor.
"Making this investment, we seek to secure our business
relations with Volkswagen and make a significant contribution to our own future plans on a lasting, long-term basis," Porsche managing director Wendelin Wiedeking said in the statement.
No take-over plans
The new VW EOS Cabrio
The company insisted that it had no plans to acquire Volkswagen, the world's fourth-largest car maker.
"The shares assumed will not under any circumstances reach the threshold at which Porsche would be required to submit a public bid for the takeover of Volkswagen," the company said.
Porsche's move is aimed at protecting VW from a potential
hostile takeover, made more likely with the anticipated lifting of the so-called Volkswagen law, which shields the car maker from hostile takeovers, with a judgment by the European Court of Justice expected in the spring of 2007.
"Our planned investment is the strategic answer to this risk," Wiedeking said in the statement.
"We wish in this way to ensure the independence of the
Volkswagen Group in our own interest. This 'German solution' we are seeking is an essential prerequisite for stable development of the Volkswagen Group and, accordingly, for continuing our cooperation in the interest of both companies."
VW on cost-cutting spree
A report in the German newsweekly Der Spiegel put the value of the deal at about three billion euros ($3.6 billion), citing an unnamed banker involved in the matter.
The announcement came after speculation that US billionaire Kirk Kerkorian, a Las Vegas hotel magnate, was looking to buy into VW.
Facing intense competition and losing market share with an aging model range, VW has been implementing a cost-cutting plan that could see the car-maker shed thousands of jobs.