Norway's sovereign wealth fund has told the board members of German auto maker Volkswagen (VW) that its costly acquisition of the luxury sports car maker Porsche was totally unacceptable since the merger only favoured owners of Porsche and not shareholders.
In a letter written to the VW board yesterday and posted on Norges Bank Investment Management website-the bank that manages Norway's $366 billion sovereign wealth fund, said that the proposed merger ''leave the impression of being designed to suit the needs of the Porsche controlling families at the expense of VW and its non-controlling owners.''
''We do not see that justifiable reasons have been presented to us for Volkswagen to assist the Porsche and Piech families by buying out their privately held automobile trading business of Porsche Holding Salzburg.''
''We call on Volkswagen to cancel plans for buying those assets unless it shows the means by which it determined the price and demonstrates that the acquisition has particular strategic value.''
The Norwegian sovereign wealth fund, which holds VW's stock worth $460 million, valued at end of last year and $92 million worth stock in Porsche, said that the planned transactions, as presented to the market, in isolation and taken together, leave the impression of being designed to suit the needs of the Porsche controlling families at the expense of VW and its non-controlling owners.
In August, Germany's biggest car manufacturer, VW agreed to pay $4.7 billion to take a 42-per cent stake in the debt-ridden Porsche Automobil Holding SE's core sports-car arm, by the end of this year, which will culminate into a full merger of Porsche SE with VW in the course of 2011. (See: VW acquires 42-per cent stake in Porsche for $4.7 billion)