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Porsche Facing More Legal Trouble

Further challenges to VW/Porsche merger.

by on Jan.03, 2012

The takeover attempt crafted by former Porsche CEO Wendelin Wiedeking now haunts the German maker.

A group of investment funds has filed a new lawsuit against Porsche Automobile Holding SE, seeking to recover approximately, $3.2 billion in losses suffered during Porsche’s failed fort to takeover Volkswagen AG in 2008.

The complaint, filed in district court in Stuttgart, alleges Porsche gained control over the price of VW common stock as it secretly built enormous derivative positions covering almost all of VW’s freely traded shares.

In the next step in the scheme, Porsche triggered a massive short squeeze, and finally released billions of Euros worth of shares for its own profit.

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The web site Investopia describes a short squeeze this way: “If a stock starts to rise rapidly, the trend may continue to escalate because the short sellers will likely want out. For example, say a stock rises 15% in one day, those with short positions may be forced to liquidate and cover their position by purchasing the stock. If enough short sellers buy back the stock, the price is pushed even higher.”


VW – Porsche Merger Delayed and Possibly Dead

Liabilities too high, warns Volkswagen.

by on Sep.09, 2011

Former Porsche Chief Wendelin Wiedeking's attempted acquisition of VW has led to major legal problems.

There are a growing number of skeptics wondering whether the formal merger of Volkswagen and Porsche will ever be completed or whether they might leave each other at the altar.

The tie-up was triggered by Porsche’s abortive attempt, in 2009, to buy out its German rival.  Struggling under massive debt and unable to complete the David-v-Goliath takeover, the smaller maker said it would become the latest brand in VW’s growing portfolio.

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But the consolidation has proven harder than anticipated to complete, even though a former VW executive is now running day-to-day operations at the Stuttgart sports car company.  According to German reports, VW will either have to exercise an option to buy out the 50.1% of Porsche it doesn’t already own or the two will need to reshape their current agreement.

A statement from VW insists that, “All parties remain committed to the goal of creating an integrated automotive group…and are convinced that this will take place,” but the kicker suggests there’s less confidence than this suggests,  The statement also cautions that VW will now, “analyze whether other potential courses of action exist.”