Porsche CEO reassuring VW over likely takeover

Photo: Porsche CEO reassuring VW over likely takeover

Porsche CEO reassuring VW over likely takeover

Porsche AG's CEO said Wednesday in an open letter that his business was no hedge-fund "locust" in an attempt to allay fears about what his company's likely takeover of fellow German automaker Volkswagen would mean.

Since the European Court of Justice ruled last month that Germany's so-called "VW law" had illegally shielded Volkswagen from any takeovers, speculation has been rampant that Porsche - the largest shareholder in VW with a 31 percent stake - would move to take it over entirely.

In an open letter to Volkswagen workers, Porsche CEO Wendelin Wiedeking said that in the event that his company does take over VW, it would not mean drastic changes.

"The Volkswagen group will not be taken apart," he said. "Unlike some hedge funds (the so-called 'locusts'), Porsche has a substantial interest in keeping the company's existing structure."

In the full-page letter printed in newspapers, Wiedeking said also that there would be no actual merger.

"That means Porsche remains Porsche and Volkswagen remains Volkswagen," he said.

Volkswagen's chief labor representative, Bernd Osterloh, welcomed the comments - the first major public statement about Porsche's plans regarding VW since the court ruling.

But, he said, VW's workers want assurances from someone from one of Porsche's family owners.

"We're always being told we should be happy that a family business has taken a stake in Volkswagen," Osterloh said.

"But in this case: Wolfgang Porsche - we have so far heard nothing from him. He cannot hide himself behind his board if the decisions lie in the hands of the family."

The "VW law" was widely expected to be overturned and in preparation, Porsche increased its holding in Volkswagen to 31 percent while Lower Saxony raised its number of shares to 20.36 percent. With more than 51 percent combined, the two could block any foreign takeover.

But Porsche has been profiting from its stake in VW, and most expect it is only a matter of time before it moves ahead to increase its shares further.

In his letter, Wiedeking gave no indication when Porsche may move to acquire the shares necessary for a takeover, but clearly implied that it would happen.

"No question: We are convinced that Porsche with Volkswagen and Volkswagen with Porsche will be more successful in the future," he said.