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. Last Updated: 07/27/2016

Porsche Raises Volkswagen Stake

ReutersPorsche CEO Wendelin Wiedeking in Frankfurt last year. Porsche's offer would keep Volkswagen in German hands.
FRANKFURT -- Prestige automaker Porsche will increase its stake in Volkswagen, maker of the Beetle, Golf and Jetta, in a move aimed at keeping the company firmly in German hands, though it does not plan to acquire Europe's biggest car maker.

Stuttgart-based Porsche, which makes upscale and expensive sports cars like the 911 and Boxster, said Saturday that it would increase its stake in Volkswagen from 27.3 to 31 percent in the next week, a move that legally obliges it to make a mandatory takeover offer for the company.

But spokesman Michael Baumann said Porsche would only offer the legal minimum 100.92 euros ($134.50) per Volkswagen share, lower than the 117.70 euros it closed at in Frankfurt trading Friday, and it is unlikely that any VW shareholder would agree to the lower price.

"We do not expect many Volkswagen shareholders to offer us their shares," he said. "Which means simply that we intend to go to 31 percent. We do not by any means intend to take over."

The offer is set to take place on Monday.

German law requires that the takeover offer only be made once, not that it succeed, Baumann said. The next threshold for a mandatory takeover is 50 percent.

At 31 percent, Porsche will be Volkswagen's largest shareholder followed only by the German state of Lower Saxony, which holds 20.3 percent.

Porsche's move was not a surprise, and analysts and markets had expected something similar to it.

In its statement, Porsche said it was seeking the larger stake as a response to fears that European Union judges would force the German government to repeal its law blocking a foreign takeover of Volkswagen, which is partly owned by the state of Lower Saxony and is looked to as both an industrial powerhouse and a major provider of jobs.