This takeover feud is not all in the family.
Volkswagen Aktiengesellschaft will take a 49.9% in Porsche AG in a first step towards a takeover of Porsche the company said today.
This is a larger stake than originally announced back in August, which proposed a 42% share for the Wolfsburg based maker after a highly leverage and hostile takeover bid by Porsche collapsed from Porsche’s inability to service a €10 billion debt incurred during the takeover.
Porsche owns 53% of VW and has voting rights. VW will pay €3.9 billion ($5.8 billion) for Porsche, up from €3.3 billion in August.
In VW’s latest statement, Europe’s largest automaker said the timetable for the contentious acquisition remains unchanged: Volkswagen will acquire a participation in the operating business of Porsche by the end of 2009. The merger of Volkswagen AG and Porsche SE is still scheduled to take place during the course of 2011.
The latest move follows the announcement last week that VW is holding an “Extraordinary General Meeting” of shareholders in Hamburg on December 3 to adopt a resolution authorizing a huge issue of new preferred shares.
A maximum of 135 million new non-voting preferred bearer shares is proposed, potentially worth more than €10 billion at current prices. VW’s preferred shareholders rejected a previous proposal in April to issue up to 151 million new shares. However, this proposal requires only the approval of holders of common stock, who agreed to the massive April dilution of ownership.
Volkswagen said it “remains committed to the phased integration of the two companies and is preserving the independence and the interests of Porsche.”
The VW takeover is being challenged by shareholder groups who say that it favors the families of the founders over stockholders.
Volkswagen’s initial preferred share capital issue, amount unspecified, is planned for the first half of 2010 in order to refinance the participation and maintain Volkswagen’s good credit rating.
In addition, the Supervisory Board proposes to elect Dr. Hans Michel Piëch and Dr. Ferdinand Oliver Porsche as members of the Supervisory Board, in each case for a full term of office. Both members of the founding family were appointed in August by the courts to succeed the former Supervisory Board members Dr. Wendelin Wiedeking and Holger P. Härter and have been members of the Supervisory Board since then.
A proposal will also be put to the shareholders concerning the creation of rights of appointment for the State of Lower Saxony. The shareholders are to decide whether the Articles of Association should be amended to entitle the State to appoint two members of the Supervisory Board of the company for as long as the State of Lower Saxony directly or indirectly holds at least 15% of the Company’s ordinary shares.
Volkswagen will also propose that certain measures require an 80% voting majority for approval. If passed, this would allow Lower Saxony where VW is headquartered, and which owns just over 20 % of the common stock, the ability to block proposals it disagrees with.