Porsche says raided in insider trading probe

21st August 2009, Comments 0 comments

The company said it was facing allegations of breaching information publication requirements as laid out by the German Stock Corporation Act and of market manipulation.

Berlin -- German prosecutors raided the headquarters of luxury carmaker Porsche on Thursday and opened a probe against former chief executive Wendelin Wiedeking on insider trading charges, the company said.

Wiedeking resigned as CEO last month after failing in his bid to acquire Volkswagen, Europe's biggest carmaker. Ex-finance director Holger Haerter, who stepped down at the same time, is also targeted in the probe, Porsche said.

"On Thursday morning, officers from Stuttgart prosecutors entered the company's offices with search warrants," the firm said in a statement.

It said it was facing allegations of breaching information publication requirements as laid out by the German Stock Corporation Act and of market manipulation.

"Porsche denies the accusations. The company will cooperate with the prosecutors and is fully supporting the investigating officers in order to contribute to a swift clearing-up of the matter," it said.

Under Wiedeking, Porsche built up a 51-percent stake in the much larger VW and wanted to take full control but the attempt failed and left Porsche squeezed under a huge debt pile. The two firms now plan to merge.

In the course of the takeover battle, VW shares soared but in recent days they have fallen back sharply as the takeover premium has unwound.

Prosecutors in the southwestern city of Stuttgart said they opened the investigation after receiving a tip by Bafin, Germany's financial market watchdog, about possible fraudulent activity.

A Bafin spokeswoman said it was looking at recent fluctuations in the share price.

During the Porsche/VW takeover saga, a series of so-called cash settlement options in VW shares earned Porsche billions as the stock climbed in value and were at one point quoted at more than 1,000 euros a share.

That briefly made VW the world's biggest company by market capitalisation.

VW was quoted at 144.31 euros at the market's close on Thursday.

Up until a few months ago, Porsche was making more money with its financial transactions than it was by selling its iconic 911 sports cars and other models, as analysts tried to explain how one car manufacturer was doing well while others were slammed by a collapse in global auto markets.

VW and Porsche aim to complete their merger by 2011 and to overtake Japan's Toyota to become the world's biggest car company by 2018.

The companies sealed the deal on the merger last week, ending a four-year battle marked by family feuds and boardroom disputes.

AFP/Expatica

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