Porsche ups stake in VW, plans lowball bid

By From money.cnn| Mar 26 2007
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Luxury carmaker Porsche unveiled a takeover offer for Volkswagen on Saturday at 14 percent below Friday's closing stock price.

The German maker of high-performance cars also said it does not want majority control of Europe's largest automaker. Porsche said in a statement it intended soon to raise its voting stake in Volkswagen to up to 31 percent from the current 27.3 percent. The larger holding forces it under German law to bid for the remaining VW shares.

Porsche already holds an option to purchase up to 3.7 percent of VW ordinary shares. Exercising it would take Porsche's holding above 31 percent and trigger the mandatory offer to other VW shareholders.

"Once this mandatory bid has been made, further increases of Porsche's stake in VW would not trigger any renewed obligation to make an offer to the minority shareholders of the Wolfsburg-based carmaker," Porsche said following an extraordinary supervisory board meeting.

Since it did not deem a premium appropriate, it only intends to pay the legal minimum required, expected to be 100.92 euros ($134.6 U.S.) per Volkswagen ordinary share.

"We do not want a majority," a spokesman for Porsche added.

Volkswagen had no immediate comment.

The expected offer is well below VW's closing share price on Friday of 117.70 euros. Speculation has raged for months that Porsche could bid for VW, which has helped send VW shares up by more than a third this year.

The German state of Lower Saxony, which controls roughly 20 percent of VW's votes, will remain a large shareholder in the carmaker together with Porsche, state premier Christian Wulff said.

Porsche said it also planned to set up a holding company that would manage the stakes in Porsche AG and Volkswagen, and that this firm would become a European company, or "Societas Europaea."

Earlier this month, Porsche Chief Executive Wendelin Wiedeking told reporters that firm had no current plans for a VW takeover bid.

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