By GEIR MOULSON, Associated Press Writer

BERLIN - Luxury sports car maker Porsche AG said Sunday it plans to acquire a stake of about 20 percent in Volkswagen AG, a move aimed at strengthening ties between the automakers and preventing a future hostile takeover of Volkswagen.

Porsche said Volkswagen had become "a significant supplier for about 30 percent of our sales volume," as well as "an important partner in development."

The two companies worked together to develop Porsche's Cayenne sport utility vehicle and Volkswagen's Touareg. They recently announced that they, along with Audi AG, were forming an alliance to develop hybrid engines.

"With this engagement, we want to secure our business relations with VW and also safeguard in the long term a significant part of our future planning," Porsche chief executive Wendelin Wiedeking said in a statement.

Stuttgart-based Porsche said it hoped the investment would enable it to head off any future hostile takeover of Volkswagen by investors "who do not have the long-term interests of VW as their aim."

That scenario could arise if the European Court of Justice rules against a German law that effectively protects the company, Europe's largest automaker, from such a takeover.

"Our planned investment is the strategic answer to this risk," Wiedeking said. Porsche said it was in contact with Volkswagen's management.

"This 'German solution' that we are seeking is a significant precondition for the stable development of Volkswagen AG" and for the two companies' future cooperation, he said.

Porsche said it was in contact with Volkswagen's management and did not plan to take over the company. Volkswagen welcomed Porsche's move, which it said supported its "independent business policy."

"A stable shareholder structure is very important" in the long term, it said.

The European Commission took Germany to court last year over the VW law. It has long argued that the decades-old law goes against the grain of the 25-nation bloc's single market principles, although German politicians claim it helps ensure stability at the company.

The Commission objects to provisions of the 1960 law privatizing Volkswagen that cap a shareholder's voting rights at 20 percent, regardless of the number of shares held, and requires a majority of 80 percent for "important decisions."

The state of Lower Saxony, where VW's Wolfsburg headquarters is situated, is currently the biggest shareholder, with a stake of 18.2 percent.

A 20 percent stake would currently cost Porsche more than $3.6 billion. Porsche said it could finance the purchase with "available liquidity," but did not elaborate.

Porsche said its investment would not reach the 30 percent threshold that, under German law, would require it to make a public takeover offer for Volkswagen.

http://news.yahoo.com/s/ap/20050925/ap_on_bi_ge/germany_porsche_volkswagen

This IMO is a rather difficult buisness transaction to understand :uh: . Porsche is already linked to VW / Audi through the Porsche-Audi corporate bond...witness the common platform of the VW Tourareg and the Porsche Cayenne and the fact that Porsche, decades ago, originally used VW-derived air-cooled engines, suspensions, and powertrains....of course eventually expanded to 300 and 400 HP.

This IMO is a rather difficult buisness transaction to understand :uh: . Porsche is already linked to VW / Audi through the Porsche-Audi corporate bond...witness the common platform of the VW Tourareg and the Porsche Cayenne and the fact that Porsche, decades ago, originally used VW-derived air-cooled engines, suspensions, and powertrains....of course eventually expanded to 300 and 400 HP.
What exactly is the Porsche-Audi bond? I thought that Porsche was an independent company and intended to stay that way (hence the Cayenne). I know they are sharing certain R&D and production resources with VW. I always thought the bond between VW and Porsche (outside of the Toureg/Cayenne) was that Ferdinand Porsche designed both the Beetle and the 911.

What exactly is the Porsche-Audi bond? I thought that Porsche was an independent company and intended to stay that way (hence the Cayenne). I know they are sharing certain R&D and production resources with VW. I always thought the bond between VW and Porsche (outside of the Toureg/Cayenne) was that Ferdinand Porsche designed both the Beetle and the 911.

Well, you just proved my point....this is not an easy puzzle to understand. :uh: I don't completely know the answer but Porsche and Audi are loosely organized....along with VW.....into a large , corporate comglomerate where ( with a few exceptions ) Porsche in general builds high-performance sports cars, the Cayenne excepted; VW builds entry and family-level (by German standards) vehicles, the Touraeg and Phaeton excepted, and Audi builds premium, stretched, and upscale versions of VW products.....the TT excepted.

Then...on top of this, the whole Porsche-VW-Audi corporate complex, of course, is in competition with the other two large German auto firms selling in the American market...... BMW and Daimler-Chrysler ( Mercedes)......and with other lesser German brands not selling in the U.S. like Opel, Ford of Germany, Borgward, etc.....

Then...on top of even THIS, there is the tug-of-war and see-saw battle going back and forth between BMW and VW for ownership of Britain's Rolls-Royce and Bentley.....and Audi's ownership of some Italian exotics.


Think it is complex? :uh: Yes...you're right. I follow the auto market like a h - -ny teen-ager follows a supermodel.....and I can't always understand it all either.

Im with Marshall... I was always under the impression that VW/Audi/Porsche/Lamborghini/Skoda were all under the same roof. I knew Porsche was under its own control but it was like the brother of the VWAG. This is perplexing. Considering that when i worked at the Car dealership in Tampa, they sent me to VW training down in Miami. They gave us all a VWAG folder for some papers we needed. There they had all the brands associated with the VWAG, and sure enough, Porsche was on there.

I need to find that damn folder!

:uh: :uh: :uh: :uh: :uh:

Im with Marshall... I was always under the impression that VW/Audi/Porsche/Lamborghini/Skoda were all under the same roof.

I'll third that. I really hope that this doesn't degrade Porsche's near-flawless quality.

To my knowledge, they do do some projects together but Porsche is pretty much independant.