Shares in the German car manufacturer Volkswagen more than doubled in value yesterday after the revelation that Porsche has upped its stake in the company to 74 per cent sent short-sellers scrambling to close their positions.
The German car giant's shares shot up by a dizzying 197 per cent in theafternoon, before closing with gains of a more modest 124 per cent at 471p in Frankfurt yesterday.
The global downturn, and gloomy news from the automotive industry, has left VW as a target for speculators looking to make money by betting on falling share prices. But following revelation from Porsche at the weekend that it has massively increased its stake, and is within a whisper of the 75 per cent threshold giving it full financial control, the VW price rocketed and short sellers were obliged to hastily buy shares in the company – of which very few remained on the market – to repay those they had borrowed. That the German state of Lower Saxony owns another 20 per cent of VW did not help.
Porsche made an official statement on Sunday that it now controls 74.1 per cent of VW stock via a 42.6 per cent direct equity stake and options on another 31.5 per cent. The company said it plans to increase the equity to more than 50 per cent by the end of the year and wants to take it to 75 per cent in 2009.
"The goal is to raise this to 75 per cent in 2009, so long as the economic conditions permit, and pave the way for a domination agreement," it said, adding that the Porsche and Piech families who control Porsche agreed last week in favour of dominating VW.
Although owning 75 per cent of voting shares would usually confer control of a company in Germany, Lower Saxony's 20 per cent gives the state a blocking minority under the Volkswagen Law.Reuse content