A recent ruling by the European Union’s highest court has cleared the way for the sports car manufacturer Porsche AG to take control of Volkswagen, Europe’s largest automaker.
The ruling, issued by the European Court of Justice Oct. 23, could have lasting implications for Škoda Auto, a Volkswagen subsidiary and the Czech Republic’s dominant automaker, and state-controlled companies throughout the EU.
The court came out against a 1960 German law, known as the “Volkswagen Law, ” that guaranteed the state of Lower Saxony a blocking vote on Volkswagen’s operations despite its limited share in the company, totaling only 20.3 percent. The law had capped the voting rights of external shareholders, like Porsche, at 20 percent despite whatever actual share held.
In preparation for what was a widely expected verdict, Porsche, based in Stuttgart, Germany, has upped its holding in Volkswagen to a dominating 31 percent over the past two years, at an estimated cost of $5 billion (94.5 billion Kc).
“We obviously have a high interest in exercising our voting rights in full, ” said Porsche CEO Wendelin Wiedeking in reaction to the verdict.
His company has raised a $10 billion credit line with banks to secure a commanding majority in Volkswagen, should the need arise. The media-savvy Wiedeking has been guarded about his future plans for Volkswagen, but last year he signaled that he was prepared to take on the Japanese giant Toyota, which recently surpassed General Motors as the world’s largest car manufacturer.
“If anyone can challenge Toyota, it is Volkswagen, ” he told the German Press Agency at the time.
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