World Economic News

German Industry Builds Defenses vs. Hedge Fund Attacks

Germany's luxury carmaker Porsche has offered to increase its share in Volkswagen assets from 5% to 20%, for the sum of 3 billion euros. The move, following consultations with both the German government and the government of Lower Saxony (which keeps a share of 18% in Volkswagen), is meant to protect the firm against hostile takeover attacks, Kerkorian-style, by hedge funds and other financial sharks.

The Porsche-Volkswagen deal involves the interesting aspect that Porsche CEO Wendelin Wiedeking has been one of the very few big industry bosses who did not desert Chancellor Gerhard Schroeder for CDU candidate Angela Merkel; and, Lower Saxony Gov. Christian Wulff is a potential successor to Merkel in the CDU, with backing from many Christian Democrats who dislike the hardline neo-con views of Hessen Gov. Roland Koch, also a potential successor.

A similar anti-hedge defense is being built by the steel conglomerate Salzgitter, which just recently signed an agreement with all its branches and the respective municipalities where they are situated, as well as with the Lower Saxony government, to protect the group against hostile takeovers.