FRANKFURT (AFP) – German luxury sportscar maker Porsche has taken over Volkswagen, the biggest European car manufacturer, after purchasing more than 50 percent of VW shares, Porsche said.

Porsche said in a brief statement late Monday that by buying new VW shares, it "will thus increase its participation to 50.76 percent" of the group's capital, compared with 42 percent before.

The news sent Volkswagen shares rocketing up 13.48 percent in early afternoon trading on the Frankfurt stock market on Tuesday.

The takeover by a family-run company run by billionaire shareholders has been a culture shock for Volkswagen, a sprawling national institution seen as a model for cooperation between shareholders and unions.

Porsche launched its takeover bid in 2005, saying it would turn Volkswagen into a "normal" enterprise and incurring fierce opposition from the unions.

Porsche had initially planned to acquire more than 50 percent of VW's stock last year but was forced to delay the operation after the value of the shares soared amid frantic stock market speculation.

At one point, they traded for more than 1,000 euros (1,350 dollars) per share, making VW briefly the biggest company in the world by stock market valuation.

On Monday, VW shares closed at 254.74 euros, close to the range Porsche had set for itself of between 200-250 euros.

VW said in August that it had overtaken Ford to become the world's third biggest automaker behind General Motors and Toyota.

Porsche is now obliged by Swedish law to make an offer for outstanding shares in truckmaker Scania, in which VW is the dominant shareholder.

But Porsche will offer a minimum price for Scania shares and has no "strategic interest" in the company, the statement said.

Porsche, which makes the 911 sports car and Cayenne sport utility vehicle, plans to raise its stake in VW to more than 75 percent this year, with which it expects to gain total control over the group.

Having more than 75 percent would allow it to seal a so-called domination contract giving it full financial control.

In Germany, a minority investor that owns 25 percent of a company's shares can block strategic decisions, but in the case of VW that level is currently set by law at 20 percent, the amount owned by the state of Lower Saxony, where VW is based.

Porsche has challenged the so-called VW law and has received support from the European Commission, which has threatened to haul Berlin into European court again after a revised version of the law retained the 20 percent minority blocking threshold.

Porsche built up its stake in the much bigger VW through the use of stock options that allowed it to catch markets by surprise last year with the size of its holding.

VW's works committee is wary of the takeover however and of Porsche boss Wendelin Wiedeking, who has crossed swords with trade unions, which are extremely powerful at VW.

VW posted sales of 109 billion euros in 2007, while Porsche, which employs 11,600 workers, reported sales of seven billion euros in its 2006-2007 fiscal year.

The IG Metall trade union fears a Porsche takeover would lead to job cuts at German VW plants, despite assurances from Porsche that it is a long-term investor in the auto giant.

German car exports down 22 pct in December

BERLIN – German auto makers exported 22 percent fewer cars in December than a year earlier, with production down by the same amount, the country's main industry group said Tuesday.

The auto industry — a mainstay of Germany's strong manufacturing sector — has been particularly hard hit by the deepening global economic crisis.

The VDA industry group said Germany exported 223,000 cars in December — down 22 percent from December 2006. It did not give details of declines in individual markets.

Over the whole of 2008, exports were down 4 percent at 4.13 million cars.

Orders from abroad were down 32 percent in December, while those from within Germany saw a 21 percent decline, VDA said. It did not offer figures for orders.

Germany is home to car makers such as Daimler AG, Porsche SE, Volkswagen AG and BMW AG.

Automakers across Europe have scaled back production as the financial crisis prompts consumers to hold off purchases.

German auto makers' production was down 22 percent in December to 275,000 cars, VDA said. It also reported a full-year decline in production of 3 percent to 5.5 million cars — the first fall since 2002.

In Germany itself, which entered recession in the third quarter, VDA said new car registrations were down 7 percent in December at 226,000.

For the full year, sales in Germany were down 1.9 percent to 3.09 million cars, the group said.

I wonder if this is a good move 4 Porsche.

Graycap23 said:

I'm trynta figure how Porsche had less than 10% of VW's sales revenue but is still able to buy them out.

Graycap23 said:

yes


Porsche has to do something.

the direction the car industry is going Porsche really has nothing to offer other than its name. It needs to make this connection with its ancestors, its roots, its parent company, which is VW in order to survive in the future.

you should visit the VW website and see their future conception of transportation.

SCNDLS said:

Profit margin.....