Norway Fund Asks Volkswagen to Call Off Porsche Takeover

Norway’s oil fund formally known as Norway’s Government Pension Fund, has spoken out strongly against the up coming planned merger between Volkswagen and Porsche SE, calling the deal “unacceptable.”

The oil fund owns shares in Volkswagen valued at 2.6 billion kroner at the end of last year and held stock worth 529 million kroner in Porsche believes that the terms and conditions of the deal are designed to suit the needs of the Porsche controlling families at the expense of Volkswagen and its non-controlling owners.

The terms and conditions of the merger agreement helped bail out the Porsche holding company, when it was struggling with 10 billion euros in debt as it attempted to take over Volkswagen. Ferdinand Piech is a member of the Porsche and Piech families that control all of Porsche’s voting shares.

Porsche, one of the world’s most profitable car brands, said on Oct. 6 that its car unit generated an operating profit margin of more than 10 percent for the fiscal year ended July 31, even as sales declined 12 percent. Volkswagen makes more cars and vans in a week than Porsche does in a year.

Norges Bank Investment Management said in the letter it has “deep concerns” over the planned merger, concerns it believes are “widely shared among investors in the equity market.”

“Unless the supervisory board takes steps to alleviate our concerns, we see little reason to support the execution of the proposed transactions. As investor we will consider the options open to us in this respect,” NBIM wrote in the letter, without elaborating.