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GERMANY: Porsche stake and VW chairman under microscope on Monday

By just-auto.com editorial team | 10 October 2005

Volkswagen's supervisory board is meeting on Monday to discuss Porsche's acquisition of an 18.5% in VW to guard against a takeover.

According to Reuters, VW chairman Ferdinand Piech's control over the board appeared stronger after comments from one of his reported opponents signalling there would be no attempt at Monday's meeting to oust him on grounds of conflict of interest.

The news agency noted that, in the days leading up to the board meeting, Piech has come under fire because he is both part-owner of Porsche - the car maker founded by his grandfather - and Porsche Holding, an importer that does business with Volkswagen, and there had been media reports of a coup to replace him as chairman with VW and Siemens board member Heinrich von Pierer.

Lower Saxony premier Christian Wulff, one of the state's two members on the board, told Reuters before the meeting that no formal action would be taken against Piech.

However, the state premier, the only VW board member to have been publicly critical of the carmaker's chairman, reportedly said he would keep a watchful eye on Piech's conduct.

"I believe that there could be conflicts of interest arising from the shareholding of Porsche - and the supervisory board chairman is an important investor there - that need to be examined," he told Reuters.

Piech reportedly has played down any attempts to unseat him and told German magazine Der Spiegel over the weekend that he planned to stay on as board chairman until 2007, when his term expires.

Reuters noted that, as chairman, Piech's vote counts twice and all 10 supervisory board members that represent the interests of VW employees are expected to back him, giving him majority control of the board in any power struggle.

Analyst Christoph Dolleschal of Dresdner Kleinwort Wasserstein reportedly warned that labour's support for Piech as chairman may have come at the expense of granting concessions that would guarantee German jobs.

According to Reuters, Dolleschal added that Porsche's targeted €300 million ($US364.3 million) in annual synergies could only be generated by using VW's size to secure Porsche's future earnings.