Shares of Porsche AG, maker of the 911 sports car, fell as much as 12 percent after the company said it's acquiring 20 percent of Volkswagen AG's common stock to prevent a hostile takeover that would undermine the companies' partnership.
"At first sight it's bad news for most Porsche investors," said Michael Rachor, a Munich-based fund manager at Activest Investment GmbH, which oversees US$69 billion in assets, including shares of the two automakers.
Porsche will pay for the Volkswagen stock out of existing capital, the Stuttgart, Germany-based company said yesterday. The investment would be worth about 3.3 billion euros (US$4 billion) at Sept. 23's closing price. Volkswagen, based in Wolfsburg, Germany, welcomes Porsche's interest in "a strategic stake," said Frank Gaube, a Volkswagen spokesman.
Volkswagen and Porsche already cooperate on building sport-utility vehicles and developing hybrid gasoline-electric engines.
The companies have blood connections as well. Volkswagen chairman Ferdinand Piech's family controls Porsche. Speculation on Sept. 22 that billionaire investor Kirk Kerkorian might buy a Volkswagen stake made the shares rise the most in almost a year.
Porsche fell as much as 79.76 euros to 598.11 euros and was down 11.4 percent at 9:18am in Frankfurt. It was the biggest decline in two and a half years. Volkswagen fell as much as 1.71 euros, or 3.3 percent, to 50.15 euros and was down 2.7 percent at 9:21am after rising 1.7 percent at the start of trading.
Porsche has been purchasing Volkswagen's common or voting shares in recent days, currently owning less than 5 percent of the carmaker's stock, Porsche spokesman Manfred Ayasse said yesterday.