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November 7, 2006

GERMANY: MAN not considering stake in VW at present

MAN is not considering taking a stake in Volkswagen at present, according to a Reuters report today (7 November).

MAN is not considering taking a stake in Volkswagen at present, according to a Reuters report today (7 November).

Last weekend, the news agency said that Volkswagen’s second largest shareholder after Porsche, the German state of Lower Saxony, favours a cross-shareholding between MAN and Volkswagen to reduce Porsche’s influence at Volkswagen.

An unnamed source told Reuters that “it won’t come to that,” although MAN has officially declined to comment.

A Porsche spokesman told German financial newspaper Frankfurter Allgemeine Zeitung that Porsche is not ruling out increasing its stake from the current 21.2% to 29.9%. This is the threshold at which it would be required to make a takeover offer for Volkswagen. Porsche holds an option to acquire an additional 3.9% of Volkswagen this year, in addition to its 21.2% shareholding.

Volkswagen has recently acquired a 20% stake in MAN as a counter-measure to MAN’s hostile takeover bid for Scania, in which Volkswagen is the largest shareholder.

Reuters noted that a cross-shareholding move could raise concerns about a resurgence of a strategy that has been common in Germany, sometimes referred to as Germany Inc, whereby companies take cross-shareholdings to shield management and supervisory boards from investor pressure.

The state of Lower Saxony has a particular interest in protecting jobs in the state.

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