July 23, 2008 / 4:02 PM / 11 years ago

EU approves Porsche purchase of Volkswagen

BRUSSELS, July 23 (Reuters) - German sports car maker Porsche (PSHG_p.DE) won permission from the European Commission on Wednesday to acquire control of Volkswagen (VOWG.DE).

“The Commission’s examination of the transaction showed that horizontal overlaps between Volkswagen and Porsche are limited,” the EU executive said in a statement.

“For all car segments concerned, Porsche will continue to face several strong, effective competitors with significant market shares,” the statement said.

In March, Porsche’s supervisory body authorised the purchase of a majority stake in Volkswagen for an investment of nearly 10 billion euros ($15.73 billion).

Lifting its stake above 50 percent did not require Porsche to make a full bid for Volkswagen (VW) because it made an offer at the legal minimum price last year which few investors took up.

The German state of Lower Saxony, VW’s second-biggest shareholder with around 20 percent of the votes in Europe’s biggest automaker, said in March it would keep its stake and continue to play an active role as Porsche’s partner.

Porsche, controlled by the family of VW Chairman Ferdinand Piech, has long been expected to gain majority control of VW after Europe’s highest court last year struck down a German law that capped individual shareholders’ voting rights in VW.

Porsche began building its VW stake in 2005.

In the wake of last year’s ruling, the German government is debating a new VW law whose draft version preserves a strong say for VW staff and Lower Saxony, something Porsche is fighting.

Reporting by David Lawsky; Editing by Ingrid Melander

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