In a judgement with potentially far-reaching consequences for German companies, the ECJ ruled that the so-called ‘Volkswagen Law’ could not be justified on the grounds that it protected the interests of minority shareholders. Passed in 1960, the ‘Volkswagen Law’ capped voting rights for shareholders at 20pc, irrespective of the size of their stake.
Shares in Porsche reacted positively to the news, rising 7pc in Frankfurt, while Volkswagen shares were off 2pc at 175 euros. Volkswagen’s stock has more than doubled so far this year on hopes Porsche will eventually make a move.
Luxury German sports car maker Porsche, VW’s largest shareholder with a 31pc stake, revealed last month that it was looking to significantly increase its holding. Emma Thelwell, Telegraph.co
Clever preparation by Porsche means that Tuesday’s ruling by European Court of Justice against the so-called Volkswagen Law, which shields the carmaker from foreign takeovers, won’t be ushering in a wave of suitors from overseas but will pave the way for the luxury car manufacturer to take full control of its midmarket compatriot.
Just five minutes after the European Union’s highest court announced it had overturned the rules to cap shareholders’ voting rights at 20.0%, Porsche (other-otc: PSEPF - news - people ), the luxury carmaker, which owns 31.0% of VW, released its own statement saying that it “welcomed” the ruling.
“With a voting interest of just above 30% in Volkswagen (other-otc: VLKAF - news - people ), we obviously have a high interest in exercising our voting rights in full, ” said Porsche Chief Executive Wendelin Wiedeking. Parmy Olson, Forbes.com
Striking down one of Europe’s most visible symbols of economic protectionism, the European Court of Justice ruled today that a German law shielding Volkswagen from a hostile takeover illegally restricts the free flow of capital within Europe.
The decision, which was expected, clears the way for Porsche, the sports-car maker that already owns 31 percent of Volkswagen’s shares, to take over the company, Europe’s largest car manufacturer.
“We welcome the decision of the E. U. court,” a spokesman for Porsche, Frank Gaube, said. “This brings us to a position, as Volkswagen’s largest shareholder, to fully exercise our voting rights.”
Porsche said it would discuss raising its stake at a supervisory board meeting on Nov. 12. Its chairman, Wendelin Wiedeking, has said that owning a majority of Volkswagen’s shares would strengthen Porsche’s efforts to collaborate with VW on development and production. MARK LANDLER, NewYorkTimes
Lawyers described today’s ruling against Germany’s “Volkswagen law” – the latest in a string of legal victories by the European Commission in its bid to clear the way for cross-border European mergers and acquisitions – as a “hammer blow against protectionism”.
Michael Grenfell, a competition partner at Norton Rose, said: “The European Court of Justice is making it more and more difficult for companies or Governments to rely on golden shares or other regulatory measures designed to inhibit takeovers.”
Germany is not alone in seeking to guard key industries and individual companies from foreign hands, but the Commission’s fight against the Volkswagen law has become symbolic of its wider fight to open markets and stamp out protectionism.
In June, the Commission followed its case against Germany by giving the Portuguese Government final warning to surrender its special rights in two energy companies, Energias de Portugal and GALP Energia. It has also initiated legal action against the Polish Government’s influence in 15 key companies, and warned Romania that the influence it holds in a large oil and gas supplier is illegal. Michael Herman, TimesOnline
| 
|