Porsche raises Volkswagen stake

Porsche bought a 21.2% investment in VW last year, saying the move would help to protect it and VW's independence. It may soon raise the equity stake to 29.9%, just below the threshold where it must make a formal takeover bid. But Porsche's influence is limited by laws preventing anyone other than Lower Saxony's regional government holding 20% of VW's voting rights. Under a 50-year old law - known as the VW law - some VW shares carry more voting rights than others. The measure effectively gives Lower Saxony a veto over key decisions affecting VW, something Porsche opposes. Lower Saxony premier Christian Wuff is a strong supporter of the VW law, saying that it protects the firm's plants in the state. But it is being challenged by the European Commission which says the measure is anti-competitive, a stance which Porsche has backed. Should the European Court of Justice decide to overturn the law in a decision expected next month, this would pave the way for Porsche to exert greater influence over future decision-making. It could also leave VW open to possible takeover although Porsche says it has no interest in buying VW, Europe's largest car producer, and wants the two firms to remain independent. Porsche's board has given its management the authority to raise its VW equity stake to 29.9% although it is not clear when this will happen. Separately, Porsche has extended the contract of its CE Dr Wendelin Wiedeking for a further five years. The move came on the same day that Porsche revealed a 70% rise in annual profits. (BBC NEWS)