Volkswagen stock soars on takeover rumours
22 September 2005, FRANKFURT - The price of Volkswagen shares soared Thursday after rumours swept the market that billionaire U.S. investor Kirk Kerkorian was rounding up stock in Europe's biggest car manufacturer.
22 September 2005
FRANKFURT - The price of Volkswagen shares soared Thursday after rumours swept the market that billionaire U.S. investor Kirk Kerkorian was rounding up stock in Europe's biggest car manufacturer.
Volkswagen declined comment, saying it did not respond to speculation, but some industry sources called the rumours absurd and said there was no evidence to back them up.
While other German blue-chip stocks were in decline, Volkswagen shares rose more than 5 per cent to peak at EUR 50.74, their highest level for the past three years, before falling slightly.
Analysts also discounted the rumours, saying investors were simply optimistic that the Wolfsburg-based company would win out over the trade unions in talks on cutting labour costs at the ailing group. Volkswagen stock has risen 20 per cent this month, they pointed out.
On Wednesday it had been reported that Kerkorian was seeking to expand his stake in U.S.-based General Motors to a maximum of 9.9 per cent after initially expanding the stake from 3.9 to 7.2 per cent.
Kerkorian's investment fund Tracinda was the dominant shareholder in Chrysler before its merger with Daimler-Benz and the Los Angeles based investor later unsuccessfully sued for damages, asserting he had been misled over the merger. He lost that case in April 2005.
An outright takeover of Volkswagen is practically impossible because the German state of Lower Saxony has a blocking stake in the company.
On the Frankfurt Stock Exchange, brokerage sources said Volkswagen was by far the most-traded stock of the day, with as much VW shares changing hands in two hours as is normally shifted in an entire day.
Labour leaders at Volkswagen said Thursday there had been progress in talks on a labour contract for a Wolfsburg production line making a new sports utility vehicle (SUV) version of the Volkswagen Golf.
VW has said it will set up the line in Portugal if the terms at Wolfsburg are not good enough. A Volkswagen spokesman would only say Thursday that the management-labour talks were making progress.
The company has set a deadline of next Monday for a settlement, and reportedly aims to reduce the labour costs per car by EUR 850. It would likely demand similar terms from labour later for production of other cars at the huge Wolfsburg site.
Subject: German news