An interesting theory about rocketing volumes in Volkswagen’s non-voting shares over the past six weeks comes from Breaking Views, which asks why Volkswagen’s preference shares have suddenly become such hot property.
It could just be savvy buyers looking to play the takeover speculation that gripped VW in the weeks before Porsche’s takeover bid. But another theory is that the mystery investor could be the luxury car-maker itself, or someone close to it.
Porsche denies owning any preference shares itself and it is impossible to identify the buyers because the preference shares are unregistered.
But why would Porsche want the shares anyway? After all, it is interested in control, and the preference shares have no votes.
The key could lie in the simple notion that the preference shares may not be voteless forever. VW could choose to convert them into ordinary voting shares if it wanted to, and its shareholders consented. And Porsche, because of its influence on VW’s board and big voting stake, would be in a position to drive through the conversion.
That in turn could be a cunning way for Porsche to tighten its grip on VW. Assuming it built a stake in the preference shares mirroring its 31 per cent stake in the voting stock. Convert the shares, and Porsche’s stake would stick at 31 per cent of the broader equity. Meanwhile, owners of the voting stock would be diluted.
Would Porsche do such a thing? After all, the holders of preference shares might not sell if they knew a conversion was in the cards. Maybe, but Porsche is much smaller than VW, so it needs to make its capital stretch as far as it can.
And Ferdinand Piëch, VW chairman and member of Porsche’s founding family, has shown himself to be hard-nosed when pursuing his own interest.
It will take a strong and clear denial by Porsche to kill this particular speculation, concludes Breaking Views.