Porsche Increases Stake in VW to Nearly 75 Percent

October 27, 2008
Today U.K.'s Autocar announced that Porsche has bought more shares of Volkswagen Group, giving it a nearly 75 percent stake in the company. This will, says Autocar, "allow the sportscar maker to gain full control of VW's cash flow."

The 75 percent stake should allow Porsche to enact a "Domination Agreement," according to German law. This legal move will enable Porsche to list VW's assets and revenues on its own balance sheets. Porsche is said to reach the 75 percent stake sometime next year.

With the German state of Lower Saxony retaining its 20 percent ownership of VW, only 5 percent of the company remains in what Autocar calls "free float." While VW claims it welcomes Porsche's encroachment on their company, German employees and unions are said to be diametrically opposed to the proceedings, fearing layoffs and vehicle production being farmed out to other countries where it can be done more cheaply.

This marks more interesting developments between two companies that share quite a bit of heritage; it was Dr. Ferdinand Porsche who designed Volkswagen's People's Car--the classic Beetle--and one can easily see the original vehicle's rear-wheel-drive layout and rear-mounted boxer engine reflected in the modern-day Porsche 911.--Colin Mathews

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