Porsche at War With German Province – Still
Porsche’s plans for Volkswagen continue to run into government roadblocks in Germany, to the ongoing detriment of all concerned.
Porsche owns over 30% of the outstanding Porsche stock and is poised to take a majority interest in the company with 51% of its shares. Earlier this year, Porsche successfully fought a legal battle that resulted in a German law which limited it to exercising no more than 20% of its shares, regardless of actual ownership. The German law was declared illegal under European Union rules.
Now, however, the Detroit News reports that the German province of Lower Saxony, which is the second largest shareholder in VW and holds 20.1 percent of the outstanding shares is asserting a German law that, in effect, allows any shareholder with more than 20% of outstanding shares to veto almost anything the company tries to do.
(more after the jump)
Porsche is seeking to get the threshold lowered at the annual meeting, but the chances of that occurring are vanishingly remote: Lower Saxony would have to agree to it.
It’s likely that this is just a prelude to another tour through the courts, again challenging the validity of a parochial law created by Germany that is inconsistent with its obligations under European Union law.
In the meantime, however, efforts by Porsche to make aggressive use of Volkswagen to expand the Porsche empire and, not coincidentally, the Volkswagen brand name are likely to be delayed, if not thwarted. Lower Saxony’s ownership interest is, in effect, a clone for the labor unions that fought and lost the previous court battle with Porsche, a battle which had centered, in part, of that law’s guarantee of union membership on the VW board of directors.
In the meantime, VW will continue its efforts to drag Lower Saxony and its workforce into the 21st century, while the automakers from Japan and North America continue their efforts to exploit auto markets in China, India, and Russia and VW is hampered in its efforts to do the same.