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A shake-up in the European automobile industry yesterday saw Porsche move to take a controlling stake in Volkswagen just hours after VW agreed to buy more than two-thirds of Swedish truck maker Scania.
Porsche, which makes the 911 sports car, is expected to spend £7.6 billion ($18.74 billion) to lift its stake in Europe's biggest car maker from 31 per cent to 50 per cent, but said it had no plans to merge the two companies.
"Our aim is to create one of the strongest and most innovative automobile alliances in the world, which is able to measure up to the increased international competition," Porsche's chief executive Wendelin Wiedeking said.
In a busy day for the car and truck industry, VW earlier signed off on a US$4 billion ($4.96 billion) deal to take majority control of Scania by buying out Sweden's Wallenberg family.
The agreement to buy the family's 31 per cent in voting rights in the company put an end to one of the most bitter takeover battles in corporate history. Scania fended off a rival bid from Germany's MAN last year and the future of the group has been in doubt ever since.
The deals are being seen as a triumph for VW chairman Ferdinand Piech, the grandson of Ferdinand Porsche who created the VW Beetle shortly before World War II. The Piech and Porsche families have a controlling shareholding in the sports car maker Porsche.
Piech, who is also chairman of MAN, is believed to be hoping to form an alliance that is able to challenge Japan's Toyota.
Porsche's board held an unscheduled meeting this week at which it gave the go-ahead for managers to increase the company's stake in VW. A review by the regulatory authorities is expected to take months.
The sports car maker had already positioned itself as VW's largest shareholder in order to protect it from a potential takeover after the European Court of Justice ruled last year that Germany's "VW law" had illegally shielded the company, which owns Bentley, Skoda and Lamborghini, from takeovers. The state of Lower Saxony is the second largest shareholder, with more than 20 per cent.
VW is important to Porsche as it supplies technology and manufacturing facilities for its products, especially the highly profitable Porsche Cayenne, the SUV credited with keeping Porsche solvent. Porsche is the more profitable car maker in terms of margins.
Wiedeking has previously said there will be "no sacred cows" at VW as he seeks to boost profitability and quality.
In a controversial move last year, Porsche made a low-ball bid for all of VW in order to see off private equity interest, which means it can now raise its stake without making the offer to all shareholders. Before details of the Porsche move emerged, VW chief executive Martin Winterkorn said at a news conference in Stockholm that uncertainty over Scania's ownership had finally been laid to rest. "This is a major step forward for all parties involved," he said.
Referring to a bid from Volvo that fell foul of European antitrust regulators almost a decade ago, Scania chief executive Leif Ostling added: "One could say the company has been in play since January 1999. That is a very long period. What we have seen now is that, most likely, the period of speculation around the ownership of Scania will be gone and that is very good for the company management and the people working within the organisation."
Ostling was forced to apologise during MAN's hostile takeover approach in 2006 after he likened the move to a German "blitzkrieg".
Last week, Volkswagen said that it had more than tripled pre-tax profit last year as it forecast a further rise in earnings and revenues, partly due to cost cuts. Pre-tax profit hit €6.5 billion ($12.27 billion), up from €1.8 billion the previous year.
- INDEPENDENT
