BERLIN (Reuters) - Investors claiming Porsche SE (PSHG_p.DE) misled them about plans to take over Volkswagen (VOWG_p.DE) in 2008, will take to German courtrooms on Wednesday for the first time, pushing demands for more than 4 billion euros ($5 billion) in damages.
A regional court in northern town Brunswick will open hearings on four lawsuits at 0900 GMT.
A fifth case, brought by Elliott Associates and other U.S. investment funds and accounting for 2 billion euros of damages alone, has yet to be scheduled.
It was unclear how long the legal dealings in Germany will last and when a verdict will be reached, a court spokeswoman said.
German and U.S. investors say that throughout 2008 Porsche camouflaged its plans to acquire VW and instead secretly piled up its holding. In March 2008, the sportscar maker dismissed as “speculation” intentions to take over the much-bigger VW, which builds more cars in a week than Porsche does in a year.
Seven months later, Porsche said it controlled 42.6 percent of VW’s common shares and cash-settled options for another 31.5 percent of the stock it had not disclosed previously. The German state of Lower Saxony, where VW is based, holds 20 percent of Europe’s biggest auto manufacturer.
Porsche’s statement caused VW shares to surge to 1,005 euros within days, briefly making the Wolfsburg-based carmaker the world’s most valuable company as shortsellers raced to buy back stock they had borrowed in a bet that VW shares would drop.
VW and Porsche have since been working to combine their operations after VW turned the tables in the tug-of-war and bought 49.9 percent of the sportscar maker in December 2009.
The risks related to pending lawsuits caused VW to drop initial plans for a merger with Porsche’s holding company. VW is now aiming to buy the remainder of Porsche’s auto-making operations at minimum taxation costs.
Porsche SE, the publicly traded holding company that owns stakes of just over 50 percent in the German sportscar maker and in VW, has repeatedly denied the allegations.
“The plaintiffs before the Brunswick court are professional investors who deliberately took a huge gamble and backed the wrong horse,” a spokesman for the Stuttgart-based company said.
German group ARFB will raise the highest claims at the hearing on Wednesday, representing investment funds seeking damages of 351 million euros from Porsche and 1.8 billion euros from both, Porsche and VW. A VW spokesman has said the case was “unfounded”.
The court will decide on Wednesday whether ARFB must give proof that it is able to shoulder the process costs in the event of defeat. It was unclear when the court will hear the actual case.
Wednesday’s inaugural hearing in Germany will coincide with ongoing legal proceedings in the United States. In December 2010, a New York court dismissed a $2.5 billion suit by short sellers claiming Porsche used manipulative trades to hide its stock positions. Most of the plaintiffs lodged an appeal while other cases are pending at a separate New York-based court.
“Should the German court chose to back the reasoning of the plaintiffs, this could potentially improve the chances of other cases,” said Stefan Bratzel, director of the Center of Automotive Management at the University of Applied Sciences in Bergisch Gladbach, Germany. “We are talking about huge possible fines here.”
Reporting By Andreas Cremer; Editing by Dan Lalor