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Porsche to raise its stake in Volkswagen

The move is aimed at maintaining German ownership but is not a takeover, the firm says.

March 26, 2007|From the Associated Press

FRANKFURT, GERMANY — Prestige automaker Porsche will increase its stake in Volkswagen, maker of the Beetle, Golf and Jetta, in a widely expected move aimed at keeping the company firmly in German hands.

A spokesman for Porsche said the company did not plan to acquire Volkswagen, Europe's biggest carmaker, which is partly owned by the state of Lower Saxony and is looked to as both an industrial powerhouse and a major provider of jobs.

Stuttgart-based Porsche, which makes upscale and expensive sports cars such as the 911 and the Boxster, said Saturday that it would increase its stake in Volkswagen from 27.3% to 31% in the next week, a move that legally obliges it to make a takeover offer for the company.

Michael Baumann, a Porsche spokesman, said the company would offer only the legal minimum of $134.50 per Volkswagen share, lower than the $156.86 that VW closed at in Frankfurt trading Friday.

"We do not expect many Volkswagen shareholders to offer us their shares," Baumann told the Associated Press. "Which means simply that we intend to go to 31%. We do not by any means intend to take over."

The offer is set to take place today.

Volkswagen's board chairman and former chief executive, Ferdinand Piech, is a member of the family that controls Porsche. He is the grandson of Ferdinand Porsche, the designer of VW's original Beetle model. The Porsche and Piech families own more than half of Porsche's stock and voting shares.

Baumann said the companies, which target completely different buyers, would remain separate, quashing any thought that upscale consumers seeking a new Cayenne would be able to go to a Volkswagen dealership to find one.

"Porsche remains Porsche," he told the Associated Press.

In its statement, Porsche said it was seeking the larger stake as a response to fears that European Union judges would force the German government to repeal its law blocking a foreign takeover of Volkswagen.

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