Four American hedge funds are suing Porsche, the family-controlled sports carmaker, for more than $1 billion in a lawsuit filed in New York yesterday.
The funds have accused Porsche and two non-family former executives of lying over its intentions towards Volkswagen. Specifically, they say Porsche disguised its intentions to takeover the larger VW.
In a press release the funds, Elliott Associates, Glenhill Capital Management, Glenview Capital Management and Perry Capital, said: "The complaint alleges that the defendants repeatedly misled investors and lied about Porsche's position and intentions with respect to VW."
The funds go on to claim they lost more then $1 billion when the surprise announcement came in October 2008 that Porsche owned a 75% stake in VW, which is owned by a rival branch of the controlling Porsche family, and intended to make a takeover bid for VW. Porsche has yet to respond to the claims.
In a reversal of fortunes, Porsche's takeover bid failed and plunged the company into €10 billion of debt leaving the smaller carmaker, and its family head Wolfgang Porsche, needing VW's help to survive. (Click here to read our coverage of the story)
The two car companies are now in the middle of a complex merger that saw VW take a 49.9% stake in Porsche in October 2009. (Click here to read our coverage of the story) This move was the first step in the merger that is expected to be concluded by 2011.
Porsche and VW are both headed by grandsons of Porsche's founder; Ferdinand Piech is VW chairman and his cousin, Wolfgang Porsche, heads Porsche. They have previously hit the headlines for family disagreement, but managed to put their personal differences behind them in order to move forward with the merger and save the family business. (Click here to read further analysis)
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