From today's NYT:

The New York Times

March 25, 2007
To Bolster Control, Porsche Will Make Bid for Volkswagen
By MARK LANDLER

BERLIN, March 24 � The German sports-car maker Porsche said Saturday  
that it would make a takeover bid for Volkswagen, a symbolically  
audacious but largely legal step in its growing control over VW,  
Europe�s largest carmaker and the inventor of the once-ubiquitous  
Beetle.

Porsche plans to lift its stake in Volkswagen to 31 percent from 27.3  
percent. Under German law, it is required to make an offer for the  
entire company once it owns more than 30 percent of the shares.

The offer of 100.92 euros ($134.40) a share is the minimum amount  
Porsche can legally offer other shareholders and is well below  
Volkswagen�s most recent closing price of 117.70 euros. A Porsche  
spokesman said it was not seeking to acquire a majority stake in  
Volkswagen any time soon.

�We expect very few, if any, shareholders to sell us their shares at  
this price,� the spokesman, Michael Baumann, said. �This gives us the  
freedom to move further without taking other special steps.�

The move confirms, however, that Porsche is determined to tighten its  
grip on Volkswagen, with which it has deep historical links. The two  
companies cooperate in manufacturing sport utility vehicles, and two  
of Porsche�s most senior executives serve on Volkswagen�s board.

In a statement, Volkswagen�s chief executive, Martin Winterkorn, said  
he welcomed Porsche�s increased stake.

Analysts said Porsche was forced to cross this threshold sooner than  
it might have wished because of the recent rally in Volkswagen�s  
share price. Many analysts had expected it to wait until a European  
court issued a ruling on a German law that protects Volkswagen from  
hostile takeover bids.

The court is expected to strike down the law, which places a cap on  
the voting rights of shareholders at 20 percent, regardless of how  
many shares they own. If it does not, Porsche could find itself  
holding a large stake in Volkswagen without commensurate voting power.

�It�s clearly a high-risk approach, because Porsche doesn�t know  
exactly what is going to happen at the court,� said Ferdinand  
Dudenh�ffer, the director of the Center for Automotive Research in  
Gelsenkirchen.

Shares of Volkswagen have risen 37 percent this year, largely on  
speculation about Porsche�s intentions.

Porsche first acquired shares in Volkswagen in September 2005, saying  
it wanted to protect the independence of its partner. It has steadily  
increased its stake, occasionally ruffling Volkswagen�s other major  
shareholder, the state of Lower Saxony, which owns 20.5 percent.

The links between the two companies are longstanding, complex and  
personal. Ferdinand Porsche, the patriarch of the Porsche family,  
designed the Volkswagen Beetle at the behest of Hitler.

The chairman of Volkswagen�s supervisory board, Ferdinand K. Pi�ch,  
is a member of the Porsche family, which still controls the sports- 
car company. He was once chief executive of Volkswagen, and continues  
to exert influence over its day-to-day affairs.

If all of Volkswagen�s shareholders were to accept Porsche�s offer,  
Mr. Baumann said, the deal would be valued at about 35 billion euros  
($46.6 billion). Porsche has lined up financing for that, though he  
made it clear that the carmaker does not intend to raise the offer  
beyond the current discounted level.