Porsche Volkswagen Merger
By 2009 Porsche’s stake in VW had increased to 50.76 percent and a full-blown takeover seemed just around the corner.
Unfortunately for Porsche, German state laws and its own mounting debts (which it used to finance the original purchase of the VW shares) ultimately forced it to turn to VW itself for help, leading to the VW Group's own purchase of Porsche stock.
The failed takeover attempt not only cost then Porsche CEO Wendelin Wiedeking his job, but it also cost investors billions once it became known. At one point VW’s share price was trading at more than $1,250, making it the world’s most valuable company at the time, however, the price dropped the next day due to negative reaction of the failed takeover and short-sellers who had been betting on VW shares to fall.
A group of investment fund managers is now suing Porsche for roughly $2.6 billion due to the failed takeover attempt and claimed market manipulation.
They filed the lawsuit in the district court of Stuttgart, Germany along with an arbitration application regarding VW, two members of the VW supervisory board and one member of the management board of VW.
Part of the lawsuit read: “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, then triggered a massive short squeeze, and finally released billions of euros worth of shares into the short squeeze for its own profit."
A spokesman for Porsche told Bloomberg that the accusations were not justified and that the company plans to reject them.
Stay tuned for an update.