PORSCHE SE won dismissal of the first two investor suits in Germany over allegations the company lied about its failed Volkswagen AG takeover plan in 2008.
Porsche shares surged the most in nine months after the ruling. Two press releases issued by Porsche in March 2008 didn’t amount to “vicious behaviour” that would have misled investors, the Braunschweig Regional Court said yesterday in a ruling that dismissed the cases.
The two lawsuits, which were seeking less than €5 million combined, argued the 911 sports-car maker manipulated stock prices in its failed bid. The two lawsuits are among five German cases seeking more than €4 billion filed since Porsche disclosed in 2008, that it controlled 74.1 per cent of VW, partly through options, and was seeking to acquire 75 per cent and eventually a takeover.
The announcement caused VW’s stock to surge as short sellers raced to buy shares borrowed in a bet that VW would fall.
The judges rejected claims that two releases Porsche issued in March 2008 constituted “vicious behaviour” because they denied Porsche sought a merger.
Even if Porsche was seeking a 75 per cent stake in VW “in the long run,” the company can’t be held liable, the court said in a statement posted on its website after today’s ruling. Porsche surged as much as 9.4 per cent to €47.25 today, the biggest intra-day gain since January 19th.
The stock has climbed 14 per cent this year, valuing the German company at €14.4 billion.
The Porsche bid for Volkswagen was part of a failed strategy by then-ceo Wendelin Wiedeking that fell apart when the European financial crisis dried up the funding to complete the takeover.
Volkswagen, Europe’s largest carmaker, agreed to buy Porsche’s car business in 2009 when its smaller rival was close to bankruptcy. The Porsche holding company, which is the largest VW shareholder, still exits as a separate, publicly traded entity. The rulings “are a positive signal,” said Albrecht Bamler, a Porsche spokesman. “In the three additional cases, which differ in part from those of today, we will also defend ourselves vigorously.” Porsche has denied the allegations. – (Bloomberg)