Porsche stock falls due to VW acquisition plans
26 September 2005, FRANKFURT - Germany's financial market regulator, BaFin, said Monday it would investigate whether Porsche should have gone public sooner about its acquisition of stock in fellow carmaker Volkswagen.
26 September 2005
FRANKFURT - Germany's financial market regulator, BaFin, said Monday it would investigate whether Porsche should have gone public sooner about its acquisition of stock in fellow carmaker Volkswagen.
Stock in Porsche fell sharply in Frankfurt as investors judged the 'white knight' purchase a waste of money. Many had invested in Porsche in the hope it would distribute some of its surplus cash to shareholders.
While other top stocks soared amid optimism on oil prices, Porsche shares were trading at EUR 622.50 Monday afternoon, down 8.2 per cent from Friday, after descending as much as 11 per cent. Volkswagen stock was steady at EUR 51.94.
Spokeswoman Anja Neukoetter said at BaFin's office in Bonn that the inquiry was routine and would establish whether Porsche had delayed its ad-hoc statement to markets about its plan to take up to 20 per cent of Europe's biggest manufacturer of volume cars.
A German weekly magazine, Der Spiegel, revealed Porsche's hunt for the stock on Saturday, a day before Porsche issued the statement.
The biggest shareholder in Volkswagen, the German state of Lower Saxony, which holds 18.2 per cent, welcomed the Porsche investment Monday. State Premier Christian Wulff said Porsche valued its location in Germany and consulted employees in decision-making.
In that sense, the two companies were "well matched", Wulff said, telling the Hannoversche Allgemeine Zeitung newspaper that Lower Saxony was not selling its shares. "We won't be getting out."
Wulff said the state wished to avoid any takeover of Volkswagen by a U.S. carmaker.
Amid puzzlement at why the maker of high-performance cars would devote billions of euros in cash reserves to buying up to one-fifth of the ailing volume carmaker, analysts at banks downgraded Porsche stock. WestLB set it at neutral and Deutsche Bank set it at 'sell'.
Christian Breitsprecher, Deutsche's automotive industry analyst, said it meant shareholders could wave goodbye to hopes of cash. He said EUR 3 billion was too much for Porsche to pay just to share in model development.
However a shareholder-rights group, DSW, praised the move, saying it benefited small shareholders, who could sell out at a profit, and brought in a powerful new shareholder to add leverage to the cost- cutting.
But DSW warned that the chairman of Volkswagen's supervisory board, Ferdinand Piech, risked a conflict of interest. A Porsche heir, he owns a large bloc of Porsche stock. Another shareholder group, SdK, said mutual benefits for both companies were perceptible.
Porsche chief executive Wendelin Wiedeking said Sunday the shareholding was intended to protect Volkswagen from takeover. In the ad-hoc statement, Porsche said it merely hoped to "intensify relations" between the two auto giants in research and manufacturing.
At Volkswagen, a spokesman denied the arrival of the white knight shareholder would cause a let-up in cost-cutting.
"It'll continue as before," he said in Wolfsburg. Last week VW said it might sell two non-core businesses including Europcar, its rental car chain.
There was meanwhile speculation that the acquisition could transform the career of Porsche chief executive Wiedeking, 53, since he would likely join the VW supervisory board and could potentially lay claim to the post of Volkswagen chief executive.
Subject: German news