Prosecutors raid Porsche offices
The offices of German luxury carmaker Porsche have been raided by federal prosecutors probing the alleged market manipulation of Volkswagen shares.
The investigation centres on former chief executive Wendelin Wiedeking and finance chief Holger Haerter, both of whom resigned last month.
The carmaker had built up a stake of 51% in VW in an attempt to launch a takeover of Europe's biggest carmaker.
Porsche denied the accusations and said it would co-operate with prosecutors.
The two carmakers have subsequently agreed to a merger, ending months of bitter feuding, which will take place in 2011.
"On Thursday morning, officers from Stuttgart prosecutors entered the company's offices with search warrants.
"The prosecutors suspect a breach of public disclosure requirements and market manipulation," Porsche said.
Under Mr Wiedeking, Porsche built up a majority stake in the much larger VW, but failed in its attempt to force a full takeover.
Porsche made huge profits on its VW shares, leading some commentators to describe the firm as a hedge fund with a carmaker tacked on the side.
In fact, the share price rises contributed 6.84bn euros to the company's pre-tax profit of 7.34bn euros in the first three months of this year.
However, the onset of the global economic crisis put paid to the company's attempts to push its shareholding in VW to 75%.
As a result of its failed takeover, Porsche was saddled with huge debts.
In order to shore up its finances, the carmaker announced last week that the state of Qatar would take a major stake in the company.
Qatar will eventually become the carmaker's third biggest shareholder, behind the Porsche and Piech families and the German state of Lower Saxony.
Under the terms of the merger with VW finally agreed last week, VW will initially buy a 42% stake in Porsche by the end of this year for 3.3bn euros ($4.7bn; £2.8bn).
The deal means that Porsche will now in effect become the 10th brand in the VW family, joining the likes of Audi, Seat and Skoda.
BBC NEWS | Business | Prosecutors raid Porsche offices
The investigation centres on former chief executive Wendelin Wiedeking and finance chief Holger Haerter, both of whom resigned last month.
The carmaker had built up a stake of 51% in VW in an attempt to launch a takeover of Europe's biggest carmaker.
Porsche denied the accusations and said it would co-operate with prosecutors.
The two carmakers have subsequently agreed to a merger, ending months of bitter feuding, which will take place in 2011.
"On Thursday morning, officers from Stuttgart prosecutors entered the company's offices with search warrants.
"The prosecutors suspect a breach of public disclosure requirements and market manipulation," Porsche said.
Under Mr Wiedeking, Porsche built up a majority stake in the much larger VW, but failed in its attempt to force a full takeover.
Porsche made huge profits on its VW shares, leading some commentators to describe the firm as a hedge fund with a carmaker tacked on the side.
In fact, the share price rises contributed 6.84bn euros to the company's pre-tax profit of 7.34bn euros in the first three months of this year.
However, the onset of the global economic crisis put paid to the company's attempts to push its shareholding in VW to 75%.
As a result of its failed takeover, Porsche was saddled with huge debts.
In order to shore up its finances, the carmaker announced last week that the state of Qatar would take a major stake in the company.
Qatar will eventually become the carmaker's third biggest shareholder, behind the Porsche and Piech families and the German state of Lower Saxony.
Under the terms of the merger with VW finally agreed last week, VW will initially buy a 42% stake in Porsche by the end of this year for 3.3bn euros ($4.7bn; £2.8bn).
The deal means that Porsche will now in effect become the 10th brand in the VW family, joining the likes of Audi, Seat and Skoda.
BBC NEWS | Business | Prosecutors raid Porsche offices
