Hedge funds seek €1.8-bn compensation from Porsche’s owning family, over aborted Volkswagen takeover

Wolfgang Porsche and Ferdinand Piech, members of Porsche Automobil Holding SE's supervisory board, are being sued by seven hedge funds seeking €1.8-billion compensation over the aborted purchase of Volkswagen AG (VOW) in 2008.

According to an e-mailed statement from Porsche SE today, the funds brought a civil action against Porsche, the board chairman, and Piech, Volkswagen's chairman, at Frankfurt Regional Court. The company described the suit as being without merit and said it would contest the claim.

A series of legal actions have been launched against the company following its October 2008 disclosure that it controlled 74.1 per cent of Volkswagen AG, partly through options, and was seeking to rise it to 75 per cent and eventually take VW over.

Wolfsburg, Germany-based Volkswagen, now controls the Porsche brand. In January, VW overtook General Motors Co in deliveries to take the world's second-largest automaker spot, behind Toyota Motor Corp.

According to commentators, the latest lawsuit forms part of a legal campaign being waged by hedge funds in various courts across the world, seeking to recoup money which they lost by betting on a decline of Volkswagen's share price in 2008 (See: Volkswagen shares surge on news of Porsche's intent to increase stake).

Porsche said yesterday, that the company and its  supervisory board members would defend themselves with all available legal means. It added, the lawsuit in Frankfurt was no different to a separate lawsuit already pending in Hanover.

In March 2008, Porsche SE dismissed as "speculation" VW takeover talks, but revealed it held 42.6 per cent of VW's common shares as also that it controlled another 31.5 per cent via financial instruments.

With Porsche revealing it had amassed control of roughly three-quarters of the shares in Volkswagen Group, shares in the German-based carmaker shot to €1,005, which briefly made it  the world's biggest company by market value.

Hedge funds that had bet on a decline in the VW stock price ended up making colossal losses, prompting them to take legal recourse.

In December 2012, a case against the company brought by hedge funds including Glenhill Capital LP, David Einhorn's Greenlight Capital LP and Chase Coleman's Tiger Global LP was turned down by a New York court, on grounds that the case was more appropriate for Germany.