Porsche SE wins dismissal of $5B case linked to VW saga

Porsche Automobil Holding SE won the dismissal of lawsuits from hedge funds seeking about 5.4 billion euros ($5.3 billion) in damages they say they incurred during Porsche’s failed takeover of Volkswagen Group more than a decade ago.

Institutional investors and private shareholders had pursued Porsche for compensation for losses they suffered in the trading of VW stock.

German judges on Friday also rejected related suits against VW from investors who sought 2.3 billion euros from the automaker because they say it failed to warn them about the alleged market manipulation.

“The claims cannot be granted under no legal aspect whatsoever,” Judge Matthias Wiese said in court.

Today’s ruling goes back to the tumultuous episode of Porsche trying to buy much larger VW in 2008, only for the plan to falter and VW turning the tables to take over the sports-car-maker instead.

In a move that triggered mayhem among VW investors, Porsche disclosed on Oct. 26, 2008 that it controlled 74.1 percent of the German carmaking giant, partly through options, and was seeking a takeover — a plan the sports-car-maker had previously denied.

Porsche’s communication about its intentions in 2008 were not “grossly wrong or grossly misleading” enough to allow any claims here, according to the judge. The company had earlier said that it considered acquiring “more than 50 percent,” a wording that well left the door open for 75 percent or more, he said.

“For Porsche SE this is an important milestone victory,” a company spokesperson said welcoming the decision.

Lead plaintiff lawyer Axel Wegner called the ruling “no surprise” as the court had positioned itself this way right from the start of “these bizarre proceedings.” He is considering an appeal.

Josef Broich, the lawyer for Elliott International LP, another of the plaintiffs, said his clients were also likely to appeal

“The court has shown that it has misunderstood central functions of the capital markets,” said Broich.

The Porsche release in October 2008 prompted short sellers to cover their positions and drove up the price of VW shares, briefly making it the most valuable listed company on the planet.

Wendelin Wiedeking, Porsche’s former CEO, and ex-Chief Financial Officer Holger Haerter were acquitted in 2016 of market-manipulation charges over the failed attempt to swallow VW.

To save Porsche from bankruptcy, VW stepped in, buying the smaller company in stages until 2012 and leaving a publicly traded holding company, whose main asset is the VW shares that Porsche accumulated.

The Porsche brand returned as a publicly-listed company on Thursday in an initial public offering. The sports-car maker ended its trading debut at 82.50 euros on Thursday, settling at the top end of VW’s initial range that valued the asset at 75 billion euros

Friday’s decision was largely expected given the judges had signaled five years ago they were ready to throw out the suit.

The plaintiffs responded by filing more than two dozen claims to have them removed from the case, alleging they were biased. While all of those claims were rejected, resolving them — combined with COVID pandemic delays — postponed the ruling until Friday.

Porsche SE, through which the Porsche and Piech families hold a majority stake in VW, welcomed the ruling.

The case is: OLG Celle, 13 Kap 1/16.

Reuters contributed to this report