The automotive world was taken by surprise on October 17, 2007, when Porsche CEO Wendelin Wiedeking announced in an interview on the Sunday Times that the Stuttgart sports carmaker was ready to take over VW.
Wiedeking expected the so-called “Volkswagen law”, which stipulated that no shareholder could have more than 20 percent of the voting rights of Europe’s number one car manufacturer, to be ruled illegal by the European Court of Justice.
However, things didn’t turn out as Wiedeking expected and in 2010, 18 hedge funds filed a US$2 billion lawsuit in the U.S. accusing the company and its former CEO (Wiedeking) and CFO (Holger Härter) for manipulating the market and trying to cover up the losses Porsche suffered after VW shares soared.
Now we learn that another group of investment funds, represented in Germany by the Broich Partnerschaft von Rechtsanwaelten law office is suing Porsche. The group is seeking around €2 billion (US$2.6 billion) in damages due to the company’s failed 2008 attempt to take control of VW that resulted in a €10 billion (US$10.3 billion) debt.
In a statement to the press, the investors accuse Porsche of “gaining control over the price of VW common stock as it secretly built enormous derivative positions covering almost all of VW’s freely traded shares, then triggered a massive short squeeze, and finally released billions of euros worth of shares into the short squeeze for its own profit.”
Porsche spokesman Frank Gaube responded to the lawsuit by stating to Bloomberg News that “The accusations are not justified and we reject them”.
It should be noted that in 2009, Porsche and the Volkswagen Group agreed to combine, but their merger has so far been halted by the lawsuits that followed, because VW does not wish to be implicated until the issue is over.
