Porsche in a defensive mode

MANAGEMENT GURU

In order to prevent hostile takeover by any foreign firm, German sports car-maker Porsche AG has decided to increase its stake in Volkswagen causing discontent among EU. Porsche, which currently holds 27.3% stake, will be increasing it to 31% (up 3.7% valued at $1.34 billion), thus enabling Porsche (if it wishes) to make a full takeover bid under current German laws. It should not be forgotten that Volkswagen owns arch rival Lamborghini and Audi. Along with the S and RS range, the introduction of the A5 and S5 models by Audi have caused severe palpitations in the Porsche camp, as the cars compete with products like the Boxter. Analysts believe that the sports-car major wants a controlling stake in Volkswagen in order to deter hostile competition from the fellow German. This move can be interpreted in two ways first; either Porsche is laying foundation to make a full takeover bid to retain its long time ally or it is just xenophobic. Porsche denies this for now.

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Source : IIPM Editorial, 2007

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