Porsche’s planned merger with Volkswagen will probably be delayed into next year because of German legal obstacles. Porsche plunged the most in 19 months.
An ongoing probe by Stuttgart prosecutors into allegations of share-price manipulation by two former board members will likely push the deal’s completion into 2012, Porsche said, adding it believes the combination will go ahead.
Volkswagen (VW) said last year that the transaction, originally planned to close in the second half, was also being held up by US lawsuits and German tax disputes. Porsche and VW, whose headquarters are in Wolfsburg, Germany, agreed to combine in August 2009 following a failed attempt by the Stuttgart-based sports-car maker to acquire its larger rival.
“Legal proceedings are proving to be more complex,” said Arndt Ellinghorst, a London-based Credit Suisse analyst with “outperform” ratings on VW and Porsche. “It’s very likely that it will happen next year because financial risks will then be more calculable.”
Porsche’s preferred shares dropped as much as ¤6.80, or 11 per cent, to ¤54.80 and were down 9.1 per cent at ¤56 as of 11.28 am in Frankfurt. VW traded down 2.4 per cent.
Investigators have expanded the scope of their probe into former Porsche Chief Executive Officer Wendelin Wiedeking and former Chief Financial Officer Holger Haerter to include allegations they may have taken risks endangering the carmaker’s existence, the Stuttgart prosecutors said in a statement today.
Wider investigation
Prosecutors also extended the probe to include three people from Porsche’s finance unit over allegations they may have made false statements in talks with banks over Porsche’s refinancing and thus may have committed credit fraud, the office said.
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“The further investigations are proving to be extremely complex and time consuming and will definitely not be completed before the end of this year,” the prosecutors’ office said.
Wiedeking’s lawyer Walther Graf said the allegations are unfounded. Haerter’s lawyer Eberhard Kempf didn’t immediately return a call seeking comment. Porsche spokesman Albrecht Bamler also couldn’t be reached.
The part of the probe looking into allegations of trading- related market manipulation was dropped, the prosecutor said.
VW in October said the combination may be delayed because of the legal and tax issues. US hedge funds last month appealed a judge’s ruling dismissing lawsuits they brought claiming Porsche cost them more than $2 billion by misleading short-sellers in its purchase of Volkswagen shares in 2008. Porsche maintains it did nothing wrong. The two carmakers must also resolve tax issues in Germany linked to any merger.
“Volkswagen concurs with the now more cautious assessment of Porsche with regards to the timing and probability of the merger,” the carmaker said in a statement today.