Porsche won’t be taking majority control of VW this year

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Porsche will not pay “ridiculous” prices for Volkswagen shares amid recessionary conditions, it said on Wednesday, backing away from its previous target to take majority control of Europe’s biggest carmaker by year-end.

Wendelin Wiedeking, chief executive, said Porsche’s goal remained to raise its voting stake to above 50 per cent as soon as possible but added: “We are under no time pressure.”

Porsche’s unexpected disclosure last month that it had lifted its stake in VW using derivatives caused VW’s share price to quadruple, reaching a high of just under €1,000.

Holger Haerter, Porsche’s finance chief, told reporters on Wednesday that he considered a price of €200 a “reasonable” level for VW shares. He said Porsche was not willing to acquire the shares for “economically ridiculous” prices.

Mr Wiedeking said it was increasingly unrealistic to achieve the goal to buy more shares within 2008 in light of the economic environment, but reaffirmed his intention to take Porsche’s stake to 75 per cent in 2009.

To take full control over VW, however, Porsche will also need Berlin to change German law and VW statutes which give VW’s home state of Lower Saxony the right to veto these plans with its 20 per cent stake.

Yesterday Porsche also announced that they cannot escape the current economic crisis in the automobile industry. Due to the decline in demand worldwide, production at the parent plant in Zuffenhausen was stopped for the first time last Friday, November 21, 2008. Furthermore, seven additional days off have been scheduled up to the end of January 2009.

Porsche has already warned that its revenue in the four months to the end of November would likely be less than €2bn, more than 15 per cent below the level of the same period last year.

All this is making the whole takeover harder for Porsche.

Source: Porsche and FT