Germany’s “Volkswagen Law” that helps hinder any hostile takeover is unnecessary, a key state official and Volkswagen board member was quoted as saying on Wednesday.
Go deeper with GlobalData
“The law is really unneeded. It does not have the protective function that some assign it. Competitiveness is the decisive factor,” Lower Saxony economics minister Walter Hirche told German newspaper Braunschweiger Zeitung in an interview, according to Reuters.
His comments stoke a debate about the 1960 law that says no shareholder can exercise more than a fifth of VW’s voting rights no matter how many shares are owned, the news agency said, noting that the European Union is trying to overturn it in a court case.
Lower Saxony is VW’s second-biggest investor and Hirche sits on the VW supervisory board along with premier Christian Wulff, who has often defended the VW law.
Reuters said Porsche last year became VW’s biggest investor, and its chief executive Wendelin Wiedeking has championed the idea of abolishing the law and suggested he could ask the EU to speed up a case due for a verdict next year.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataHirche reportedly said he was untroubled by the case now before the European Court of Justice, noting Lower Saxony would still have two seats on VW’s board even if the law is struck down.
“But should Porsche buy more than 25%, this would open greater possibilities for Porsche,” Hirche said, according to the report. “There would then be a change in the balance of power.”
Porsche has 21.2% of VW’s voting rights and intends to raise that to a blocking minority of 25.1% soon by exercising a call option. Lower Saxony has 20.8% of the votes, Reuters said.
Hirche ruled out prospects for Lower Saxony to increase its stake in VW but added that it would not sell it on the market.
“I cannot imagine that the state would simply put its stake on the stock market. A large investor would have to be involved,” he told the paper.
Reuters noted that Hirche, a laissez-faire Free Democrat and Wulff’s junior coalition partner, had suggested in an interview in April 2004 that Lower Saxony could sell its then-18% voting rights stake as early as 2008, which prompted quick and unequivocal denials from the state chancellory.
