VW to take full control of Porsche
The most convoluted saga in car industry history is due to end this August when VW will buy the 50.1% of Porsche's parent company that it does not already own.
This ends a battle that started in 2005, when Porsche, bizarrely, started buying into VW and then tried to swallow its vastly bigger German neighbour. Think of those wildlife films where a snake swallows a deer, but substitute an elephant for the deer, and you get the idea of the difference in scale.
Porsche first bought 18.5% of VW in late 2005, apparently at VW's own request, to prevent hedge funds buying into the German giant. Then Porsche decided it could buy VW itself and increased its share to 30.6% in 2007 and had control of 75% of the shares by October 2008. However, VW refused to give control to Porsche, hiding behind a rule that said no shareholder had more than 20% voting rights, regardless of shareholding. This was ruled illegal under EU Competition Law, but Chancellor Merkel simply said Germany would ignore the ruling. Yes, that is the same Chancellor Merkel who now insists that all EU countries abide by European fiscal regulations.
With the credit crunch, Porsche ran out of cash and VW decided to turn the tables and take over the sports-car manufacturer. It has taken years to negotiate around the legal challenges, including allegations that Porsche covertly cornered the market in VW shares. Now VW seems to have found a way of structuring the deal so it is not legally a takeover, but a company restructuring, thus avoiding a €1 billion tax bill. Unfortunately, Britain is in no position to point the finger at a German company for doing that.