Providers and Administrators in blue logo
MenuMENU
SearchSEARCH

Porsche Shares Plunge After Volkswagen Merger Fails Over Pending Lawsuits

September 9, 2011
5 min to read


Porsche SE plunged the most in more than two years after saying efforts to combine with Volkswagen AG by the end of 2011 had failed because of pending lawsuits.


The merger has been held up by lawsuits in the U.S. and an investigation by German prosecutors linked to Porsche’s botched effort to buy VW. The two carmakers agreed to combine in 2009 after Porsche racked up more than 10 billion euros ($13.8 billion) of debt in the attempt to take over VW, reported Bloomberg.

Ad Loading...


Short sellers of VW stock have sued Porsche in the U.S., claiming the carmaker secretly piled up VW shares and later caused the investors to lose more than $1 billion. A lawyer representing claimants in Germany said today the plaintiffs had officially filed a suit seeking 1.1 billion euros in damages. Porsche, which has repeatedly denied all wrongdoing, identified the possible German lawsuit as a concern earlier this year.


“The lawsuits are posing risks that cannot be quantified,” said Tim Schuldt, a Frankfurt-based analyst at Equinet AG who recommends selling VW stock and has a ‘reduce’ recommendation on Porsche shares. “We won’t see results on the suits until next year. Moving ahead with a merger in such an unpredictable environment would be the wrong thing to do.”


Porsche preferred stock plunged 5.98 euros, or 14 percent, to close in Frankfurt trading at 37.99 euros, the biggest drop since May 7, 2009. The shares are down 26 percent this year, valuing the Stuttgart, Germany-based company at 11.7 billion euros. VW’s preferred shares fell 4.20 euros, or 3.9 percent, to 103.75 euros, giving it a market value of 45.8 billion euros.


The two carmakers will now need to come up with a new agreement if they intend to combine VW with Porsche’s holding company, which owns 50.7 percent of VW’s common shares and 50.1 percent of the Porsche car-making business. The original deal required the final decisions by the end of 2011.


VW and Porsche also have the option to forego a full merger and instead fold Porsche’s auto-making business into the VW group while leaving the holding company to manage the Volkswagen shares. The two carmakers have already deeply integrated their operations, with VW paying 3.9 billion euros ($5.4 billion) in December 2009 for 49.9 percent of Porsche’s automotive unit.

Ad Loading...


“Porsche will in any case become part of VW but the probability of a full-blown merger has definitely lessened,” said Marc-Rene Tonn, a Hamburg-based analyst with M.M. Warburg, who recommends buying VW stock and has a “hold” on Porsche shares. “A full-fledged merger always allows for greater cost savings as companies could cooperate more effectively.”


The German suit, filed in a Braunschweig court against Porsche and VW, was brought by a company bundling claims from 41 banks, insurance companies and investment funds, Franz Braun, a Munich lawyer representing the plaintiffs in the case, said today in an e-mail. The plaintiffs claim they were harmed by market manipulation in the trading of VW shares and disclosure rule violations.


Porsche, which has not yet received court documents related to the new lawsuit, dismissed the actions as “unfounded,” said Frank Gaube, a spokesman for the sports-car maker. VW has also not received any official court confirmation, Christine Ritz, VW investor relations chief, said.


Porsche is also fighting German legal obstacles and a U.S. investigation into share-price manipulation allegations linked to the failed effort to buy VW. Stuttgart prosecutors in February said their still ongoing probe had “solidified” suspicions Porsche didn’t adequately inform the market between 2007 and 2009 about its intentions to take control of VW.


“The continuing legal hurdles mean that it is currently impossible to quantify the economic risks of a merger,” VW said in a statement late yesterday.

Ad Loading...


The two carmakers are already intertwined even without a merger. Ferdinand Piech, whose family controls Porsche, is the VW supervisory board chairman, while Martin Winterkorn serves as chief executive officer of both VW and the Porsche holding company. The two also share technology and plants, with VW building part of the Cayenne sport-utility vehicle at its factory in Bratislava, Slovakia.


“Both companies are attractively valued, whether Porsche is integrated or not,” said Juergen Pieper, a Bankhaus Metzler analyst in Frankfurt. “The cooperation between the two companies can continue well and good as it is.”


As part of the original deal struck in August 2009, VW can pay cash for the remaining stake in Porsche’s automobile operations through a put/call structure allowing the sports-car maker to sell the rest of its core business to VW. Those options could be exercised between November 2012 and January 2015.


While this option would allow VW to fully fold Porsche’s automotive business into the VW group, it would leave Porsche’s holding company to manage the VW shares and take legal and financial responsibility for the outcome of the lawsuits. The price to follow this route would be linked to the valuation of the auto-making business at the time of the purchase.


VW said a necessary revaluation of the put/call structure for accounting reasons will have a “clearly positive contribution” to third-quarter figures whereas Porsche said it will likely post a “negative group result” for the first nine months.

Ad Loading...


Porsche SE’s third-quarter earnings may be reduced by about 1.6 billion euros because of the revaluation of the holding company’s remaining stake in its car-making operations, a person familiar with the matter said.


The exact impact of the non-cash adjustment of the auto unit’s valuation on Porsche’s books will be released when the holding company publishes results in late October, the person said, declining to be identified discussing the matter before an official announcement.

More Industry

Line graphic showing week-over-week wholesale auto price changes
Industryby StaffApril 22, 2026

Black Book: Weekly Market Update

Wholesale auto conversion rates dropped slightly as auction buyers proved picky last week, analysts observed.

Read More →
pavement with car and charger wrapped around it painted on
Industryby Lauren LawrenceApril 16, 2026

EV Battery Cycle Life at Risk

Fast charging of electric vehicles provides a solution for range anxiety, but it also poses a risk to battery cycle life due to increased temperatures, according to an EV supply chain data provider.

Read More →
Photo of exterior facade of Beardmore Chevrolet store
Industryby Hannah MitchellApril 14, 2026

Founding Family Sells Nebraska Dealerships

Expanding Midwest automotive group picks up three stores as part of the robust transaction activity early this year.

Read More →
Ad Loading...
Up-close photo of car battery
Industryby Hannah MitchellApril 13, 2026

Automaker Increases Parts Recycling

Stellantis is adding a third end-of-life vehicle dismantling facility to feed its growing reuse business sparked in large part by autos’ growing lifespans.

Read More →
Photo of white 2026 Ford Bronco on a sandy beach
Industryby Hannah MitchellApril 10, 2026

March New-Vehicle Sales Don’t Reflect War

Cox Automotive data shows Americans doubled down on big-is-better despite price increases. Slightly higher incentives helped fuel the demand.

Read More →
Photo from the rear of the XC60 SUV
IndustryApril 8, 2026

Volvo to Shift Some EV Production to U.S.

The automaker says its movement of some electric-vehicle work to the S.C. factory is part of a more tailored product focus. It also plans to add a new hybrid model to the plant’s itinerary.

Read More →
Ad Loading...
Bar graphic depicting week-over-week change across the various vehicle segments
Industryby StaffApril 7, 2026

Black Book: Weekly Market Update

Last week's wholesale automotive auction activity continued in a healthy mode, though buyers practiced selectivity.

Read More →
red car at a gas station being filled with gas. Efficiency Drives Demand. Providers and Administrators logo
Industryby Lauren LawrenceApril 7, 2026

Gas Prices Driving Consumer Interest

CarGurus’ first quarterly review of 2026 shows that affordability concerns are continuing to drive consumer purchases with a shift to more fuel-efficient options.

Read More →
Blurred photo of red car moving down a road
Industryby Hannah MitchellMarch 31, 2026

Automakers Have More Tricks Up Their Sleeves

JD Power analysts see auto retail faring this year’s storms well through various means, though it acknowledges conditions are challenging to accurately predict.

Read More →
Ad Loading...
background view of Washington D.C. with the capitol building and cherry trees. Text says 'What's the Cost?' with two diverging arrows and the Providers and Administrator's logo
Industryby Lauren LawrenceMarch 31, 2026

Insurance Rates Continue to Fall

Car insurance premiums have continued to decline so far this year, the overall national average settling at $138 per month in March, according to Insurify data.

Read More →