It’s what lawyers call “precedent setting.” Porsche has won a legal battle in the European Union that puts Volkswagen at risk of becoming a little bitty part of the Porsche empire. In fact, it’s not so much a risk as a certainty.
Very soon Porsche won’t just control VW – it might actually own it.
It is an interesting commentary on how the world car market has developed.
The court ruling, issued in Stuttgart, voided a German law which had restricted voting rights associated with ownership of VW stock and also guaranteed VW workers seats on the Board of Directors of the company.

The law restricted any single Volkswagen shareholder to exercising no more than 20% of the voting rights in the company, regardless of the percentage of company stock owned by that shareholder.

Porsche owns 30% of the Volkwagen stock. 

Though some sources reported that Porsche is now expected to acquire more than 50% of the VW stock, the company’s president has previously denied that intention. He has said that the Porsche board has only authorized acquisition of 31.1% of the outstanding stock, and that acquiring more than 50% would require the company, under German law, to tender for all outstanding shares, which Porsche does not wish to do.

However, having 30% of the stock likely gives Porsche voting control over the company.

The lawsuit developed because Porsche initially indicated that it would offer seats on the board to the workers, but not as many as the workers had enjoyed previously. So, citing the law, the workers sued, contending that Porsche’s plan to acquire more than 50% of the VW shares through a holding company would violate that law. Porsche responded by contending that the law had been superseded by the EU legal requirements.

Last week, the workers lost.

that the workers not only lost the battle, but the war, as well.

Not only has Porsche’s chairman, Wendelin Weideking, publicly expressed his intent to eliminate soft work rules from VW plants, the Porsche finance director, Holger Harter, recently disclosed that Porsche did not intend to allow any VW board seats to be held by worker represenatives.

The whole thing is something of a fantasy-land event. It is as though Corvette were to acquire General Motors, ignoring for the moment that GM owns the brand. Volkswagen is the large company, owning Bentley and Bugatti. Poorly managed, it has been. But it hardly seems possible that a niche carmaker such as Porsche could swallow the German whale carmaker. 

That, however, is what bad management does for one company and good management does for another. 

Porsche has big plans for VW, too. Weideking ha made no secret of his intent to turn VW into a competitor for Toyota. Porsche has invested substantially in VW and plans further investment. While the company will keep the Porsche name pure – a sports vehicle maker – it intends to use Volkswagen and its Audi brand to compete in lower priced markets globally.

Ralph Kalal
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  (103) posted on 11.2.2007

Maybe VW will start working more on improving their cars so that they can compete in the world market without the fear of takeover

  (132) posted on 11.2.2007

Wasn’t really a contest to be honest..

MadTourist  (48) posted on 11.2.2007

Despite the fact that I do feel for the laborer, it has been Porsches position from the start to save VW AG from outside buyers. That was a very smart move on their part considering their part considering their heavy investment with them and the fact that a good deal of sharing has come their. Despite reservations, Porsche has not just survived but have thrived because they have balanced their risk taking with some very smart moves. Porsche wanting to control VW and not lose to a company or buyer outside of the country is very smart, they may now be seeing a light at the end of the tunnel that is even brighter is they exercise a more clout within the group…in time this may very well spell good things for both in the future.

MadTourist  (372) posted on 10.31.2007

VW currently makes poorly built, unreliable vehicles. They may be stylish and fairly performance oriented, but they are in general, dogs. In order to "become" Toyota, VW must do two key things. Admit when it is wrong and recall models when and where they fail. Toyota does that a lot, much to the satisfaction of its fans. Secondly, it must engineer and build better cars. If all else fails, VW can just wait. Toyota currently seems to be already turning itself into a VW with all the poor engineering it has been doing. LOL. If getting rid of "soft" rules at its plants and kicking workers off the board will mean better cars then all I have to say to those unfortunate souls is ,,AUF WIEDERSEHEN!’’

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