Porsche interest in VW increases

Due to dramatic distortions on the financial markets, Porsche Automobil Holding SE decided last weekend to disclose its holdings in shares and hedging positions related to the takeover of Volkswagen AG, Wolfsburg.

As at October 26, Porsche SE held 42.6 per cent of the Volkswagen ordinary shares in addition 31.5 per cent in so-called cash settled options. The aim is to increase the stake to 75 per cent in 2009, paving the way to a domination agreement. The intention to increase the Volkswagen stake to above 50 per cent in November and December remains unchanged.

Porsche decided to make this announcement after it became clear that there are by far more short positions in the market than expected. The disclosure should give so-called short sellers - financial institutions which have betted or are still betting on a falling share price in Volkswagen - the opportunity to settle their relevant positions without rush and without facing major risks.

According to media reports over the weekend, the EU commission will soon qualify the new draft of the VW Act tabled by the federal government as not complying with EU law. It is expected that a new lawsuit will be filed with the European Court of Justice.

The Porsche and Piëch families, who own all Porsche ordinary shares, have expressed their backing to the steps taken by the members of Porsche SE's board of management Wendelin Wiedeking and Holger Härter. Both families have expressed their support for a domination of the Volkswagen group by Porsche.