Porsche wins dismissal of US$5.3b case linked to Volkswagen saga

PORSCHE Automobile won the dismissal of lawsuits from hedge funds seeking about US$5.3 billion in damages they say they incurred during Porsche’s failed takeover of Volkswagen more than a decade ago.

Institutional investors and private shareholders had pursued Porsche for compensation for losses they suffered in the trading of Volkswagen stock. German judges on Friday (Sep 30) also rejected related suits against VW from investors who sought 2.3 billion euros (S$3.23 billion) from the carmaker because they say it failed to warn them about the alleged market manipulation. 

“The claims can’t be granted under no legal aspect whatsoever,” Judge Matthias Wiese said in court.

Today’s ruling goes back to the tumultuous episode of Porsche trying to buy the much larger VW in 2008, only for the plan to falter and Volkswagen turning the tables to take over the sports-car maker instead. In a move that triggered mayhem among VW investors, Porsche disclosed on Oct 26, 2008 that it controlled 74.1 per cent of the German car making giant, partly through options, and was seeking a takeover – a plan the sports-car maker had previously denied. 

Porsche’s communication about its intentions in 2008 weren’t “grossly wrong or grossly misleading” enough to allow any claims here, according to the judge.

“For Porsche SE this is an important milestone victory,” a company spokesperson said welcoming the decision.

The Porsche release in October 2008 release prompted short sellers to cover their positions and drove up the price of VW shares, briefly making it the most valuable listed company on the planet. Wendelin Wiedeking, Porsche’s former chief executive officer, and ex-chief financial officer Holger Haerter were acquitted in 2016 of market-manipulation charges over the failed attempt to swallow VW. 

The allegations date to when Porsche sought to acquire VW, a plan that was stymied by the global financial crisis because banks refused to bankroll the audacious foray. To save Porsche from bankruptcy, Volkswagen stepped in, buying the smaller company in stages until 2012 and leaving a publicly-traded holding company, whose main asset is the VW shares that Porsche accumulated.

The Porsche brand returned as a publicly-listed company yesterday in an initial public offering. The sports-car maker ended its trading debut at 82.50 euros on Thursday, settling at the top end of VW’s initial range that valued the asset at 75 billion euros 

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Friday’s decision was largely expected, given the judges had signalled five years ago they were ready to throw out the suit. The plaintiffs responded by filing more than two dozen claims to have them removed from the case, alleging they were biased. While all of those claims were rejected, resolving them – combined with Covid pandemic delays – postponed the ruling until today. BLOOMBERG