Porsche in the fast lane for VW control

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PORSCHE is set to take total control of fellow German car maker Volkswagen, after the biggest opponent of Porsche's ambitions at VW threw in the towel and European lawmakers called for an end to a law protecting VW from takeover.
The state of Lower Saxony, VW's second-largest shareholder after Porsche, will no longer stop the sportscar maker taking both the chairmanship and a third seat on VW's supervisory board, its premier has told colleagues and fellow directors.
The decision paves the way for Ferdinand Piech, a controlling shareholder of Porsche, to remain VW chairman if he wishes, as is likely.

It also means victory for Porsche, which owns 27.4 per cent of VW and is authorised by its board to buy up to 29.9 per cent.

It ends, at least for now, one of the longest running and most bitter sagas in recent European business history.

Christian Wulff, the Christian Democrat premier of Lower Saxony, has repeatedly opposed Mr Piech's power grab and once tried to oust him.

Mr Wulff has been in talks with German and foreign investors on whether to try again in April when Mr Piech's term on the supervisory board is due for renewal.

But, following the forcing out of Bernd Pischetsrieder, a Wulff ally, as chief executive in November, shortly after Porsche raised its stake from 21 per cent, the state premier saw the situation had changed.

"Wulff has basically given up the fight totally on VW," said one person who spoke to him recently.

Many independent shareholders had opposed Mr Piech staying on, and Porsche's influence, as they felt the sportscar maker had taken control of VW without paying a premium, in the process weakening corporate governance.

"Wulff giving up is very sad news," said one of the largest opponents, a top-10 shareholder.

Most analysts say Porsche no longer needs to launch a full takeover offer - necessary if its stake goes above 30 per cent - because it already has full control. Meanwhile, the law protecting Volkswagen from takeovers has been ruled illegal by the advocate general to the European Court of Justice, in a move likely to lead to its scrapping later this year.

In a preliminary ruling, the advocate general said the law blocked the free movement of capital because it prevented "any intervention in the management of the firm".

It will now be up to the court itself to pass judgment on the VW law, but in most cases the judges follow the reasoning of the advocates general.

Source:
http://www.theaustralian.news.com.au/story/0,20867,21227259-36375,00.html