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Porsche to discuss raising stake in VW

From businessweek| March 07 , 2007

Luxury automaker Porsche AG plans to discuss whether it should increase its stake in Volkswagen AG to nearly 30 percent, a move that would put it just shy of level at which German law would require a takeover offer.

Speaking at the Geneva Motor Show, Porsche Chief Executive Wendelin Wiedeking said the Stuttgart-based company would "in the next few days" discuss raising its stake in Volkswagen from its current 27.4 percent level. Porsche is already VW's largest shareholder.

Shares of Porsche rose 2.8 percent to euro981.29 (US$1,283.82) in Frankfurt trading.

Wiedeking gave no timeframe for any decision, but reiterated that the company has no plans to raise the stake to 30 percent, which would trigger a mandatory takeover bid for Europe's biggest automaker by sales.

Porsche became Volkswagen's largest single shareholder, partly to protect the Wolfsburg-based automaker from a takeover by financial investors.

Wiedeking said he wouldn't be surprised if a private equity firm takes over an automaker at some point.

"There's a lot of restructuring potential in the auto industry, and a few bargains are on the market," he said. "But the auto industry is difficult. You need experience, and mistakes can become very expensive."

Looking at his own company's performance, he told reporters that demand for the company's Cayenne model has picked up as demand for the revamped line has risen.

"Order intake for the new Cayenne is unbelievable... It's way above our expectations," Wiedeking said, but without releasing a precise figure.

He said that global Cayenne sales for the full fiscal year, which ends July 31, are expected to come in at around last year's level, which saw Cayenne sales of about 34,000 vehicles.

"The limit is the production capacity, not demand," he added. The revamped sports-utility vehicle will hit showrooms March 1.

Wiedeking said he is "very optimistic" that the "operative business" in the current fiscal year will be above last year.

He held off on any forecasts for the U.S. market, which is the company's largest, waiting instead to see how the U.S. economy develops.

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