While Porsche has been gobbling up stake in Volkswagen for about a year, a little piece of legislation called the VW Law has been the only thing preventing the sports car builder from gobbling up the giant German automaker. Currently Porsche holds a 31% stake in VW, but with news today of the European Court striking down the VW Law, many expect the company to quickly increase its stake to a controlling 51%.
The VW Law itself dates back to 1960, and while a bit complicated to understand, basically stipulates that 80% shareholder approval is required to pass major decisions and regardless of how much stake a single entity holds, its voting block cannot be greater than 20%. Since the company’s home state of Lower Saxony owns 20.1% of VW, it alone holds the power to influence the company’s decision making. Under the VW Law, it has held the power to block any decision that would threaten its jobs and local economy. Thus, Porsche’s desire to own a controlling stake in VW has been blocked by Lower Saxony as well as its inability to use the full force of its 31% stake in voting.
Porsche has been very patient so far, and will apparently remain so a little longer. It is not expected to increase its stake in VW before the end of the year, but everyone seems fully aware that today’s historic news means that the company will sooner or be controlled by Porsche.
Porsche tells VW: We won’t eat you until after the holidays, Merr
Filed under: Etc., Euro, Porsche, Volkswagen
Porsche got what it wanted with the repeal of the “Volkswagen Law”, but has done nothing yet but stand over its prey, waiting for… well, nobody knows what Porsche is waiting for. However, Porsche CEO Wendelin Wiedeking has told VW that the smaller company will not make Christmas dinner of the larger: Porsche will wait until after the holidays to take majority control of Volkswagen.
His exact words were “Christmas is the holiday of peace; let’s create a little harmony.” Yet there doesn’t seem to be much of that going around. Porsche created a new board structure, and the board will have six seats. Porsche and VW workers thought that meant that each company got three seats each. VW, with 324,000 workers to Porsche’s slightly-less-than 12,000, doesn’t like that arrangement, so it’s suing for more seats. Wiedeking clarified the board structure to say that either company could have as many seats as both sides could agree to – but that he wouldn’t go against Porsche employees’ expectation of three.
So no one knows how the transaction will play out – and to hear Wiedeking tell it, that includes him. “Even now,” he said, “none of the players involved knows how many moves will still be required and how long it will take until the game is finally over.” If this were a movie, he would then laugh maniacally, stroke the white cat in his lap, and hit the big red button on the console in front of him. But it’s not. So, like everyone else, we’ll just wait and see.