German State Strikes Back At Porsche Bid

Volkswagen's second-biggest shareholder, the state of Lower Saxony, plans to oppose a bid to quash its right to block major decisions at Europe's biggest automaker.

HANNOVER, Germany (AP) -- Volkswagen AG's second-biggest shareholder, the state of Lower Saxony, said Wednesday that it plans to oppose a bid to do away with its right to block major decisions at Europe's biggest automaker.
Porsche, VW's biggest shareholder, wants to change a rule under which ''significant decisions'' require the approval of shareholders representing 80 percent of Volkswagen's stock, plus one share.
Lower Saxony holds 20.1 percent of Volkswagen, giving it a right to block major decisions at VW.
Porsche is calling for VW's annual general meeting on April 24 to lower the threshold to 75 percent in keeping with standard German securities laws.
However, Lower Saxony governor Christian Wulff told the state legislature that the higher limit is legally admissible -- ''and so we will not vote for Porsche AG's proposal to change the statute.''
Porsche currently holds 31 percent of Volkswagen. In March, Porsche Automobil Holding SE's supervisory board authorized managers to set in motion steps to take a majority stake -- a long-expected move.
It did not specify exactly what the size of that stake would be and stressed that it had no plans to merge with Volkswagen.
The European Court of Justice last year struck down the nearly 50-year-old ''VW law,'' whose main effect was to protect Volkswagen from a hostile takeover.
Germany's Justice Ministry said it would comply with the ruling, in particular scrapping a provision that capped shareholders' voting rights at 20 percent, whatever the size of their holding.
However, it hopes to retain a scaled-down law that includes the 20 percent blocking minority and a provision that allows worker representatives to block the relocation of production. Porsche has criticized the plans.
''Porsche AG came aboard when there was a big VW law; it will be able to and will have to live with there being a reduced VW law in the future,'' Wulff said.
Volkswagen has its headquarters at Wolfsburg, in Lower Saxony.
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