VW faces power struggle as Porsche sets takeover date

Business Materials 25 April 2008 02:40 (UTC +04:00)

Europe's biggest carmaker Volkswagen AG presented a picture of solid financial performance at its annual general meeting Thursday as a power struggle took shape for control of the German-based group, the dpa reported.

Luxury sports car manufacturer Porsche, which has a 31-per-cent holding in Volkswagen, said it expected to achieve majority control by autumn, once regulatory clearances had been obtained.

A Porsche spokesman said: "Six months is a realistic time-frame. By then it would be September or October. But we would not object if it were sooner."

At the meeting in Hamburg, Porsche executives clashed in debate with the German state of Lower Saxony, which holds a 20.3-per-cent stake in Volkswagen.

Christian Wulff, the premier of Lower Saxony, seeks a continuation of the so-called Volkswagen Law, which advocates say protects VW from takeover bids from outside Germany.

As a part of an effort to retain a blocking minority, Wulff has argued that an 80-per-cent threshold should be maintained for major VW decisions. In general, the threshold stands at 75 per cent for German companies.

Opposing resolutions by Porsche and Lower Saxony on the issue failed to achieve the necessary majorities Thursday, meaning the struggle will most likely have to be resolved in the courts.

VW chief Martin Winterkorn told shareholders attending the meeting that the company had never sold so many cars and earned so much money, with the group reporting before the meeting a 26-per-cent jump in first-quarter after-tax profit to 929 million euros (1.48 billion dollars).

The result offers a challenge to the carmaker's main rival, the Japanese auto group Toyota.

Hundreds of workers held a noisy demonstration outside the meeting to protest Porsche's plans for a new labour relations structure at VW.

With tensions on the rise over Porsche's industrial relations plan, top VW labour leader Bernd Osterloh lashed out at Porsche chief executive Wendelin Wiedeking accusing him of suffering from "dangerous fantasies of being all powerful."

VW shares edged down 1 per cent to 185.50 euros as the company's shareholders were meeting.