Hedge funds file €1.8bn lawsuit against Porsche board members
Seven hedge funds have filed a €1.8bn lawsuit against Porsche’s chairman and another board member, in the latest legal tussle related to the carmaker’s failed takeover bid for Volkswagen.
The hedge funds accuse Porsche and its management of misleading the market in the run-up to its disclosure in late 2008 that it was seeking to take control of Volkswagen, its much larger peer.
Wolfgang Porsche and Ferdinand Piëch, who is also chairman of Volkswagen, face a civil claim in a Frankfurt court for €1.8bn in damages from the investment funds, the carmaker said in a statement.
The two automotive grandees, both grandsons of founder Ferdinand Porsche, will be supported by the company, which described the action as “a trial tactic” and “without merit”.
Porsche SE, a holding company, is already facing a suit filed in 2012 in Hanover from the same funds. Porsche said the new claim against the board members does not include any new content, adding that the company and the two men “will resort to all legal means to defend themselves against this lawsuit”.
“Porsche SE confirms that all press releases the company published during the period in dispute are truthful,” it said in a statement, which did not name the funds.
The Porsche-Volkswagen saga transfixed the automotive and business world in 2008, but enraged those investors who were wrongfooted and lost money.
Porsche secretly began acquiring options to buy shares in Volkswagen, but repeatedly dismissed speculation that it intended to take control of the company. On the strength of these denials, some investors short-sold Volkswagen shares, the investors claim.
When Porsche eventually revealed the extent of its options position in October 2008, Volkswagen shares rose as investors rushed to cover short positions. Volkswagen eventually took full control of Porsche’s carmaking operations.
Previous lawsuits from hedge funds have been thrown out. A New York court found in Porsche’s favour in a $1.4bn claim in 2012.
However Porsche’s former chief financial officer Holger Härter was found guilty of credit fraud during the takeover battle. Mr Härter and Wendelin Wiedeking, the carmaker’s former chief executive, have been charged by German prosecutors with market manipulation. Both men deny wrongdoing.