Porsche gets green light from European Commission to aquire VW
July 24, 2008
It looks as though Porsche has finally caught a break in its bid to take control of Volkswagen. The European Commission announced yesterday that it was granting Porsche permission to go ahead with the takeover. Porsche isn't out of the woods yet, though, as the German government is still considering new legislation that would preserve voting power for VW staff and the government of Lower Saxony, which controls 20.1 percent of VW, that has allowed them to block any major company decisions.
"The Commission's examination of the transaction showed that horizontal overlaps between Volkswagen and Porsche are limited," the EU executive said in a statement. "For all car segments concerned, Porsche will continue to face several strong, effective competitors with significant market shares."
Porsche, controlled by the family of VW Chairman Ferdinand Piech, has been attempting to take over VW since 2005. It's biggest victory came last year, when Europe's highest court stuck down Germany's 48-year-old Volkswagen law as anti-competitive and preventing the free flow of capital. Following the ruling, Porsche's supervisory body signed off on the purchase of a majority stake in VW for 10 billion euros, or $15.73 billion. Porsche currently controls 30.6 percent of VW.
Since the court ruling last year, it has been expected that Porsche would move ahead with the takeover. Now that the European Commission has signed off, Porsche's last major hurdle will be the proposed German legislation and possible interference from Lower Saxony, which said back in March that it would retain it's share of VW and play an active role as Porsche's partner. The 15 billion-dollar question now is whether or not Lower Saxony will retain it's blocking power, or whether Porsche will be able to essentially take complete control of VW.
Source: Reuters UK