LUXEMBOURG A bid by Porsche to take a controlling 51 percent interest in Volkswagen has received a legal green light following a ruling by the European Court of Justice today that overturns a draconian law originally designed to protect Europe's largest carmaker from hostile takeovers.
According to the court's ruling, the law — commonly referred to as the "Volkswagen law" in European legal circles — restricts the free movement of capital and the freedom of establishment. Under its auspices, no investor was permitted to exercise a voting right of more than 20 percent on Volkswagen's board, regardless of how many shares they owned. Adopted in 1960, it was put in place to protect the interests of the German state of Lower Saxony, which owns a 20 percent stake and has two members on the VW board.
The repealing of the law clears the way for Porsche to take up a number of options and further increase its current 31 percent majority stake in Volkswagen.
"We obviously have a high interest in exercising our voting rights in full," said Porsche boss Wendelin Wiedeking in reaction to the ruling.
Early indications are that Porsche's stake in Volkswagen could rise — probably very gradually — to as much as 51 percent in the longer term. Among the driving forces behind Porsche's decision is Ferdinand Piëch, former VW chairman and head of its supervisory board.
In welcoming the overturning of the law shielding Europe's largest carmaker, Porsche wasted little time in trying to reassure other shareholders, announcing it will discuss raising its stake in Volkswagen at a supervisory board meeting planned for November 12.
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