Investment Funds sue Porsche over failed merger image

A group of investment funds filed a lawsuit against Porsche SE, seeking to recover approx. 2 billion euros ($2.60 billion) Euro in losses suffered as Porsche SE attempted a takeover of Volkswagen AG (“VW”) in 2008.

The plaintiffs also filed an arbitration application regarding Volkswagen (VOW), two members of the VW supervisory board and one member of the management board of VW, according to the statement.

In their lawsuit, the investment funds argue that Porsche manipulated the stock market as its announcement that it was taking over Volkswagen and the reasons for its move had come late.

A person familiar with the details of the compensation claim told the Financial Times that the seven complainants are Elliott Associates, Elliott International, The Liverpool Limited Partnership, Perry Partners, Perry Partners International, DE Shaw Valence International and York Capital Management Europe (UK) Advisors.

A spokesman for Porsche rejected the complaint, which follows other cases against it that have so far been unsuccessful.

“The accusations mentioned are not new and we reject them,” he said, adding that the company had not been officially informed of the claim against it.

On October 26, 2008, Porsche SE suddenly revealed the extent of its huge derivative position and claimed control over 74.1 per cent of VW common stock.

For the first time, after strong denials in the weeks and months before, Porsche SE confirmed that it wanted to cross 75 per cent and implement a domination agreement which would give it full control over VW and its liquidity.

This resulted in what the New York Times called “a short squeeze of historic proportions.”

Porsche abandoned the takeover attempt in 2009, saddled with debt just as global markets collapsed, and agreed to pursue a merger that was supposed to be concluded this year.
The lawsuits have been a major obstacle to completing that merger.