Norway’s $445 billion oil fund demanded that Volkswagen AG, Europe’s largest automaker, cancel its merger with Porsche SE, saying the deal favors the German sports-car manufacturer’s family owners.
The proposed transactions are “unacceptable” as they “leave the impression of being designed to suit the needs of the Porsche controlling families,” Norges Bank Investment Management, which manages the fund, wrote in a letter dated yesterday to Volkswagen supervisory board Chairman Ferdinand Piech and board members.
The fund, which invests Norway’s oil and gas revenue in stocks and bonds outside of the country, said it’s weighing unspecified “options” if VW doesn’t reconsider the deal, which was agreed upon after months of negotiations. The German state of Lower Saxony, VW’s second-largest shareholder with a 20 percent stake and veto rights, has signed off on the August agreement between the two German carmakers.
“It seems a bit late in the game to argue about the deal,” Stephen Pope, chief global market strategist for Cantor Fitzgerald in London, said in an interview. “The majority of investors want to get this over and done with. It will lead to a lot of cross fertilization in the group.”
VW agreed in August to pay 3.3 billion euros ($4.9 billion) for a 42 percent stake in Porsche SE’s automotive unit as part of a gradual merger of the two manufacturers. VW plans to fully integrate the Stuttgart, Germany-based maker of the 911 sports car by 2011.
“The creation of an integrated automobile group with Porsche is based on sound industrial logic,” said Christine Ritz, a spokeswoman for Volkswagen. “It furthers Volkswagen’s multi-brand strategy and expands its position in the premium segment.”
“Porsche is the most profitable car company in the world and will continue to grow in the coming years. All of our shareholders will profit from that,” she said, adding that the price Volkswagen pays for Porsche was determined to be “fair” by investment banks and accounting firms.