U.S. Supreme Court Decision Seems To Augur Well For Porsche/VW
Porsche had some good news for investors, as it pared expectations of losses from its ill-fated attempt to buy VW, and reported better than expected sales of its new Panamera four-seater.
But it was news from the U.S. that probably caused the most pleasure to Porsche shareholders.
The U.S. Supreme Court ruled that investors who buy shares in foreign companies outside U.S. jurisdiction cannot claim damages under U.S. laws.
35 Hedge funds had sued Porsche, after Volkswagen shares shot up to more than €1,000 apiece as short-sellers scrambled to cover positions after the luxury sports-car maker revealed in October 2008 that it had access to almost the entire free float of VW’s outstanding shares. Many investors were wrong-footed by the announcement.
It was not immediately clear if this meant the end to law suits against Porsche. If that is the case, a major expense would be removed for Porsche, and a big obstacle to the smooth merger with VW would be eliminated.
Meanwhile, Porsche cut its loss forecast for the current year ending in July to below €1 billion from several billion Euros previously.
“The better outlook reflects a smaller than anticipated book loss on the sports carmaker’s 50.76 per cent holding in VW in the first nine months. The group also benefitted from robust demand for its new luxury saloon, the Panamera, in the period and again outperformed the global industry, achieving an operating profit margin of around 12 per cent,” Bank America Merrill Lynch said in a report.
Porsche is expected to raise fresh capital in the first half of next year ahead of the merger with VW, although analysts are sceptical that this will be achieved by the planned date of 2011.
Neil Winton – July 1, 2010