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Wednesday, September 17, 2008

Porsche bumps stake in VW to 35% ensuring control

STUTTGART, Germany — Porsche Automobil Holding, the entity controlled by the Porsche and Piëch families, acquired an additional 4.89 percent of Volkswagen on Tuesday. This pushed its stake to more than 35 percent, ensuring de facto control of the larger automaker.

Porsche's chief executive, Wendelin Wiedeking, himself the subject of ongoing speculation in the European press as to his future with both companies, said: "Our goal continues to be to increase our stake in Volkswagen to more than 50 percent. We look forward to continuing and intensifying our cooperation with the managing board of Volkswagen, which is based on a spirit of mutual trust, and are hoping for a quick resolution of the conflict between the employee representatives of Porsche and VW."

Under German law, the labor unions are represented on the supervisory boards of publicly traded companies. Porsche said representatives of VW's unions will now take seats on the Works Council and Supervisory Board of Porsche.

A Porsche press release on Tuesday said Wiedeking, who has had a contentious relationship with VW's labor representatives, is "confident" that the unions of both companies would cooperate, leading to "a constructive and forward-looking coexistence."

Before it proceeds to acquire additional shares in VW, Porsche is awaiting the results of European antitrust and regulatory proceedings, which it said are to be completed shortly.

Porsche also said that German law requires it to make an obligatory offer for Audi, but it considers Audi to be an integral part of the VW group and it has no intention of separating the two.

In a related story, Britain's Financial Times carried a report that the power struggle between VW and Porsche has evolved into a family feud at Porsche between cousins Wolfgang Porsche, chairman of Porsche's supervisory board, and Ferdinand Piëch, chairman of VW's supervisory board.

According to the newspaper, Wolfgang Porsche, with the support of other family members, proposes to oust Piëch from his board position at VW because Piëch allegedly made the family "look like a fool" during the ongoing acquisition of VW and rancorous relations with the automaker's unions. The paper quoted Wolfgang Porsche as saying he was "appalled" at Piëch's behavior.

What this means to you: Germany's ongoing industrial soap opera makes The Tudors look pretty tame in comparison.