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Billionaire Porsche Family May Want to Buy Even More Shares of VW

Billionaire Porsche Family Wants to Buy Even More Shares of VW

(Bloomberg) -- Volkswagen AG’s main owners, the Porsche and Piech billionaire clan, said they may buy more voting shares in the world’s largest carmaker, arguing it’s undervalued after paying 400 million euros ($454 million) to add to their stake.

VW rose the most in almost three weeks Tuesday after the family holding company, Porsche Automobil Holding SE, said the German carmaker’s market value doesn’t reflect its “vast potential.” The family investment vehicle now owns 53.1 percent of VW, an increase of 0.9 percentage points.

VW, alongside other carmakers, is under pressure to pay for the seismic shift to electric cars while the payoff could be years away. Record spending to keep up with emissions regulation and investor doubts about the future of incumbent automakers has hurt valuations for VW, which now trades at 5.45 times earnings. That compares with a level of 14.4 among companies in the consumer discretionary sector.

Billionaire Porsche Family May Want to Buy Even More Shares of VW

CEO Herbert Diess is looking to accelerate cost cuts and workforce reductions at the main VW and Audi brands, where profitability has slipped. Wolfgang Porsche, chairman of Porsche SE, this month said he fully supports VW management’s push to tackle what Porsche described as “fossilized structures” that bog down VW and Audi.

VW’s preferred stock, which carries no voting rights, rose the most since March 1, and was trading up 2.4 percent to 148.98 as of 2:22 p.m. in Frankfurt.

Separately, Porsche SE and VW continue to face legal fallout stemming from Volkswagen’s diesel-emissions cheating in 2015, including a criminal probe by German prosecutors into market manipulation by VW CEO Diess, Porsche SE CEO and VW Chairman Hans Dieter Poetsch and then-VW CEO Martin Winterkorn.

Porsche SE’s legal chief and VW general counsel Manfred Doess told analysts he assumes prosecutors might indict “at least one” of the three officials under scrutiny.

German prosecutors are investigating whether the three executives informed investors too late about VW’s diesel breaches and their potential impact. VW is also facing an administrative probe as part of the case. VW and the executives have denied the allegations.

Billionaire Porsche Family May Want to Buy Even More Shares of VW

Further share buying by Porsche SE will target the remaining free floating shares of VW’s ordinary stock. There’s no plan for a larger deal to buy out the Qatar Investment Authority’s 17 percent stake, Chief Executive Officer and VW Chairman Hans Dieter Poetsch said.

Porsche SE targets profit after tax between 3.4 billion euros and 4.4 billion euros in 2019 after 3.5 billion euros last year.

Alongside Porsche SE, the state of Lower Saxony holds a 20 percent voting stake. All voting stock of Porsche SE is controlled by the Porsche and Piech family.

To contact the reporters on this story: Christoph Rauwald in Frankfurt at crauwald@bloomberg.net;Karin Matussek in Berlin at kmatussek@bloomberg.net

To contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net, Elisabeth Behrmann

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