STUTTGART -- Volkswagen Group's main owners, the Porsche and Piech billionaire clan, said they may buy more voting shares in the automaker, arguing that the company is undervalued.
The family holding company, Porsche Automobil Holding SE, said VW's market value doesn’t reflect its "vast potential."
Porsche SE said on Tuesday that it has raised its voting share in VW Group to 53.1 percent from 52.2 percent after paying 400 million euros ($454 million) to add to their stake.
VW, alongside other automakers, is under pressure to pay for the seismic shift to electric cars while the payoff could be years away. Record spending to keep up with emissions regulation and investor doubts about the future of incumbent automakers has hurt valuations for VW, which now trades at 5.45 times earnings. That compares with a level of 14.4 among companies in the consumer discretionary sector.
VW CEO Herbert Diess is looking to accelerate cost cuts and workforce reductions at the main VW and Audi brands, where profitability has slipped. Wolfgang Porsche, chairman of Porsche SE, this month said he fully supports VW management’s push to tackle what Porsche described as "fossilized structures" that bog down VW and Audi.
Separately, Porsche SE and VW continue to face legal fallout stemming from Volkswagen’s diesel-emissions cheating in 2015, including a criminal probe by German prosecutors into market manipulation by Diess, Porsche SE CEO and VW Chairman Hans Dieter Poetsch and then-VW CEO Martin Winterkorn.
Porsche SE’s legal chief and VW general counsel, Manfred Doess, told analysts he assumes prosecutors might indict "at least one" of the three officials under scrutiny.
German prosecutors are investigating whether the three executives informed investors too late about VW’s diesel breaches and their potential impact. VW is also facing an administrative probe as part of the case. VW and the executives have denied the allegations.
Further share buying by Porsche SE will target the remaining free floating shares of VW’s ordinary stock. There is no plan for a larger deal to buy out the Qatar Investment Authority’s 17 percent stake, said Porsche CEO and VW Chairman Hans Dieter Poetsch.
Alongside Porsche SE, the VW's home state of Lower Saxony holds a 20 percent voting stake in Volkswagen. All voting stock of Porsche SE is controlled by the Porsche and Piech family.
Porsche SE targets profit after tax between 3.4 billion euros and 4.4 billion euros in 2019 after 3.5 billion euros last year.
Reuters contributed to this report
