Porsche legal victory sees shares soar

SHARES in German car manufacturer Porsche soared yesterday after a US judge dismissed a lawsuit seeking more than $2bn (£1.3bn) in damages, clearing the way for a merger with Volkswagen.

Shares rose by 12 per cent, while Volkswagen gained 3.2 per cent.

The judge dismissed claims by hedge funds Elliott Associates and Black Diamond of securities fraud.

US district judge Harold Baer said the firms could not maintain securities fraud claims based on Porsche’s tactics when it tried to take over VW in 2008.

The lawsuit had delayed attempts by Volkswagen to bring Porsche into its operations next year and the ruling paves the way for a planned rights issue by Porsche.

The hedge funds alleged they were victimised when Porsche covertly bought a stake of Volkswagen ordinary shares using swap instruments as part of a so-called “sneak attack” method plan to take over Europe’s largest car manufacturer.

Spain’s ACS used similar tactics to amass a stake of almost 30 per cent in Germany’s Hochtief, while car supplier Schaeffler bought up a stake in Continental using swap agreements that skirted disclosure rules.

When Porsche revealed its holding in October 2008, shares of VW soared, briefly making the company the world’s biggest by market value and causing losses for hedge funds which had bet on a share price decline.