Friday, August 12, 2011

Porsche Shares Jump After U.S. Court Dismisses Lawsuit

FRANKFURT—Shares in Porsche Automobil Holding SE jumped 11% when markets opened Monday after a U.S. court last week dismissed a lawsuit filed by U.S. hedge funds, removing a major roadblock for the sportscar maker’s planned merger with German peer Volkswagen AG.

DZ Bank analyst Michael Punzet said in a note to clients the U.S. court decision clears the way for Porsche’s planned €5 billion ($6.69 billion) capital increase ahead of the merger, but noted that some tax issues still need to be resolved.

Equinet Bank analyst Tim Schuld lifted his rating on Porsche’s stock to hold from reduce, but noted that plaintiffs have 30 days to file an appeal to the U.S. Court of Appeals for the Second Circuit.

At 0901 GMT, Porsche shares traded up 11% at €66.20, while the DAX bluechip index was up 1.1%.

A group of U.S. hedge funds filed a lawsuit over alleged market manipulation by Porsche during the period it built its stake in Volkswagen, claiming more then $2 billion in damages. Some investors in Germany threatened to take similar action, but according to recent statements by Porsche no lawsuits have been filed.

Porsche Chief Executive Martin Winterkorn, who is also in charge of Volkswagen, reiterated at the end of November that the company regards the claims as unfounded. “We believe that the facts are on our side and we have the better case in all of these legal issues,” Mr. Winterkorn said during a shareholder meeting.

Separately, Volkswagen confirmed Sunday that Mr. Winterkorn’s contract as CEO has been extended by five years until the end of 2016. The decision was widely expected as Mr. Winterkorn enjoys the support of Volkswagen’s influental supervisory board chairman Ferdinand Piech and the company’s powerful labor unions.

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