Reuters/Hamburg/Frankfurt
Wiedeking: under a cloud
Porsche’s former CEO and finance head may have put it at risk of collapse, German prosecutors said as they widened a probe triggered by the sports car maker’s failed Volkswagen bid.
Shares in Porsche plunged as the company said a planned merger of the two German car makers will be delayed by the investigation into former chief executive Wendelin Wiedeking and ex-chief financial officer Holger Haerter.
The stock fell by as much as 11% yesterday and was trading 8% lower at €56.6 by 1100 GMT, while Volkswagen shares were down 2.5% as investor hopes of a combination of the two German car makers dwindled and analysts warned that the delay could hit earnings.
Volkswagen turned the tables in 2009 on predator Porsche, which had to sack its vaunted management team after their failed attempt to acquire VW brought family-owned Porsche to the brink of collapse.
Wiedeking and Haerter are under investigation for allegedly manipulating the market in VW shares and are also the target of a
Prosecutors in
“There is suspicion former board members took existential risks for the company by doing share price hedging deals in connection with the attempt to take over Volkswagen,” the
The prosecutors’ office and Porsche were not immediately available for comment.
The probe is the latest in a series of setbacks to hit plans for a merger of Porsche and Volkswagen.
Porsche said late on Wednesday that the probability of it being absorbed into Volkswagen had shrunk to 50% from 70%.
“Many investors and managers believe that the longer it takes for the merger to begin, the smaller the chances of its success,” said Markus Huber, a senior trader at ETX Capital.
“Auto makers are already suffering hugely, due to the prospects of lower economic growth prospects and the high oil price,” he said.
Some analysts were more sanguine, arguing that a merger in 2011 had always seemed a stretch.
“Due to the unresolved tax issue, the likelihood for a merger in 2011 is down to about 30% anyway, with a postponement to 2013/2014 being the 50% base case,” said Silvia Quandt Research analyst Albrecht Denninghoff.
Volkswagen said in a statement it was sticking with its agreement to combine with Porsche, adding it could take longer to determine how and under what conditions the transaction would take place.
“Because of that, Volkswagen shares the now more cautious view of Porsche on the timing and probability of a combination,” it said.
Analysts said they also expected the two companies’ earnings to be affected.
“The lower probability of the merger in 2011 has an impact on the accounts of Porsche and Volkswagen as the value of the put and call options depends largely on this,” said LBBW analyst Frank Biller.