At a hearing in Stuttgard held today, presiding judge Carola Wittig was heard to have said that the arguments of 23 hedge funds who have sued Porsche Automobil Holding SE over its aborted takeover of Volkswagen AG were not convincing, Bloomberg said. Wittig added that the assessment of the court is preliminary and could change after more arguments will be heard.
Viking Global Equities LP, Glenhill Capital LP, David Einhorn's Greenlight Capital Inc and 20 other hedge funds were seeking €1.5 billion from Porsche.
"We see high risks for the plaintiffs that they will lose their case, even if we take for granted all the events took place as the plaintiffs claim they did. That's even true if we assume that Porsche's leadership already had the plan to take over VW in early 2008," Wittig added.
Bloomberg said that the comments of the judge was one of the initial indications on how the investors would fare with their lawsuits in German courts. The lawsuits were the fruit of Porsche's bid for Volkswagen more than four years ago, which resulted to a quick merger between the automakers in 2012. The hedge funds investors claimed that Porsche failed to advise them of its plans to take over Volkswagen.
The news outlet said that the German court will be issuing a ruling on the case on March 17.
In the lawsuit, investors said that Porsche denied about its plans to acquire the German firm, ultimately misleading them throughout 2008. Aside in Stuttgart, Porsche is reportedly facing lawsuits in Braunschweig, Hanover and Frankfurt. The point of contestation was a 2008 press release by Porsche and the subsequent lying of its head of investor relations Frank Gaube.
Wittig said that as per German law, someone who wishes to acquire a company need not to make that kind of disclosure in a press release.
Marcus Grosch, a lawyer for the funds, said that Porsche had the obligation to tell its investors the truth in the press release. "A company which seeks to counter speculations has no right to lie to reach that goal. If there was a plan to take over at the time, Porsche needed to say so or remain silent," Grosch said.
