Porsche Faces Another Lawsuit Over Failed VW takeover

Jan 5 2012

Those inclined to fret of over a few thousand pounds in their car finance deals might spare a thought for the directors of the holding company Porsche SE.  The Financial Times reports that Porsche SE is now facing a compensation claim totalling €2 billion in a Stuttgart court following its doomed 2008 attempt to take over Volkswagen.  The sums we sweat over in car credit agreements are dwarfed by figures like this.

This is but one of a number of proceedings faced by the carmaker in the U.S. and Germany, with potential damages reaching unquantifiable proportions.  Volkswagen suspended plans to merge with Porsche SE in September as a result.

A Reuters release quotes a Porsche SE spokesman as saying “… the accusations mentioned are not new and we reject them.”

The latest claim comes from seven complainants: York Capital Management Europe (UK) Advisors, DE Shaw Valence International, Perry Partners International, Perry Partners, The Liverpool Limited Partnership, Elliott International and Elliott Associates.  They jointly allege that Porsche SE clandestinely built a derivatives position that covered virtually all of Volkswagen’s traded shares.

The above claim they sustained heavy losses when Porsche SE went public with the derivatives position and were forced to buy Volkswagen stock in the process.

Although Volkswagen’s share price soared, Porsche SE’s bid ultimately failed, leaving it teetering on the brink of bankruptcy with debt estimated at billions of euros.  Volkswagen insists that it remains committed to building an integrated firm with Porsche, however.  It could, for example, buy any remaining shares that it does not already own in Porsche’s carmaking operations.

Suddenly, a car loan of a few thousand pounds seems eminently manageable.

Author - Louise Hutchinson

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