Last week we reported on Porsche’s interest in buying a controlling stake in Volkswagen. The only thing really standing in the way of Porsche’s goal was the antiquated VW law which stipulated that regardless of how much stake a single entity holds, its voting block cannot be greater than 20%. Porsche currently owns a 31% stake, but despite this fact, it was unable to exercise its voting powers to their full potentials. Volkswagen’s home state of Lower Saxony owns 20.1%,thus holding a majority stake and the power to influence the company’s decision making. Under the VW Law Lower Saxony held the power to block any decision that would threaten its jobs and local economy.

Today, the European Court struck down the VW Law, and many now expect Porsche to increase its stake to a controlling 51%. Having been extremely patient up until now, they don’t seem to be in any hurry. In fact, Porsche may not make a move until the first fiscal quarter of the new year.

Keep checking Driver’s Life for new developments in this saga.

[Source: Autoblog]

A decision by the European Court of Justice expected to be issued October 23 will declare an antiquated law called the “VW Law” in violation of EU rules. The VW Law prohibited any entity from holding more than 20% of the voting rights of Volkwagen, despite how much stock that entity held. This ruling could open the door for Porsche to increase its stake in VW to 51%, thus giving them majority ownership and voting rights.

Among the many complications this move could create, Wendelin Wiedeking, Porsche’s CEO said he’ll only allot half the seats on the corporate labor board to VW, despite VW’s 324,000-member labor force being significantly larger than Porsche’s 12,000 workers. The head of VW’s workers council threatened to sue Porsche if such a thing transpired.

What do you think of this?
[Source: Motor Authority]