GERMANY: Tension builds ahead of VW AGM
There is some speculation that Porsche could announce that it has raised its stake in Volkswagen AG to more than 50% at the AGM tomorrow.
German automotive industry analyst Ferdinand Dudenhoeffer told AFP that he is convinced there will be an announcement. The Porsche holding company that holds the Volkswagen stake approved the share build-up in early March.
Porsche and Volkswagen's second largest shareholder, the state of Lower Saxony, are currently in a power struggle, which will be tackled at tomorrow's meeting. The Stuttgart company has tabled a motion at the AGM calling for some of VW's articles of association to be changed, including the one that gives the state a 20% blocking minority vote on key decisions. Lower Saxony has tabled its own motion to enshrine the blocking minority.
Neither motion is expected to be approved, but Christian Wulff, the prime minister of the state of Lower Saxony, may be forced to change his position if Volkswagen announces that it has raised its stake. Earlier last week there were reports that Porsche had approached Lower Saxony and offered to buy all or half of its stake in Volkswagen. Bloomberg reported that Lower Saxony was offered EUR5bn (US$7.9bn) for half of its 20% stake. In return it was offered two seats on Volkswagen's supervisory board and guarantees that decisions about factory closures or mass job cuts would require a two-thirds majority agreement.
Wulff has reportedly been considering raising the state's shareholding in Volkswagen AG from 20% to 25%, to allow it to retain a blocking minority in the longer term. (A 25% blocking minority is normal in most companies, while Volkswagen has been the subject of a special law to give Lower Saxony a 20% minority veto.) Lower Saxony could fund the purchase through the sale of its stakes in around 50 other companies.