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Porsche Automobil Holding SE, usually shortened to Porsche is a German holding company with investments in the automotive industry. According to Bloomberg News, Porsche has won a fight against the investors that are seeking a total of 5 billion euros, that’s $7 billion. The investor’s suit is over claims that the German carmaker lied during its failed bid to takeover Volkswagen AG back in 2008.
Porsche disclosed that in October 2008 it controlled 74.1 percent of Volkswagen AG, partly through options, and was seeking to acquire 75 percent as part of a takeover strategy. According to Bloomberg News, since then the company has faced a series of lawsuits and investigations.
It has been reported that the lawsuit was filed by 23 hedge funds. Viking, Glenhill and Greenlight were among funds that sued Porsche in New York state court over the carmaker’s options strategy. Investors claim that Porsche misled them over their intention to bid for VW. Bloomberg News has also reported that Porsche’s head of investor relations, Frank Gaube, misled shareholders in phone calls when he denied allegations that the company sought a takeover.
The deal was classified as a restructuring rather than a takeover. In 2012 Volkswagen AG paid Porsche shareholders $5.61 billion for the remaining 50.1% it did not own.
“There was never a guarantee that Porsche wouldn’t change its mind and decide the next day to do the takeover,” said Judge Carola Wittig. Even though there are other law suits still pending, a Hanover-based analyst at NordLB, Frank Schwope said that, “The ruling is a positive indication for Porsche, of course.”
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One of the first assignments the company received was from the German government to design a car for the people, which was a “Volkswagen.” This resulted in the Volkswagen Beetle, one of the most successful car designs of all time. The Porsche 64 was developed in 1939 using many components from the Beetle. Porsche AG is looking to enter 15 new countries by the end of the decade, mainly in Africa, as part of its growth strategy. A lawyer for the hedge funds, Matthias Wuehler, declined to comment.
Image credit: www.bloomberg.com
