After the U.S. lawsuit filed by 26 hedge funds against Porsche SE was dismissed, the automaker’s shares rose on Friday. This is just one of several legal actions over its purchase of shares in Volkswagen, the biggest automaker in Europe. Porsche’s preferred shares in Germany went up by 6.3% to 61.70 euros, the highest price reached since January 2011.
However, analysts cautioned that Porsche’s win in court centered on a legal formality instead of the substance of the case. Last Thursday, a five-justice panel of the New York State appeals court in Manhattan determined that the state was the wrong place for the lawsuit to be filed.
So now, the hedge funds have 30 days to make a decision on whether they will pursue the lawsuit in New York's highest state court, the Court of Appeals. DZ Bank analyst Michael Punzet said Porsche still faced other lawsuits that remain pending. He explained that the ruling was based on the jurisdiction and not the claim itself.
There is still a pending $2 billion lawsuit by other hedge funds in a U.S. federal court. Porsche has so far not released a statement about its triumph in court. Previously, Porsche had said that the hedge funds' lawsuits are without factual and legal merit. Prosecutors in Stuttgart (which is Porsche’s headquarters) divulged last week that market manipulation charges against former Chief Executive Wendelin Wiedeking and former CFO Holger Haerter were tied to VW share purchases.
The lawyers of these defendants have denied that their clients committed any wrongdoing. The New York State appeals court had dismissed the case filed by hedge funds (which include Glenhill Capital LP, David Einhorn's Greenlight Capital LP and Chase Coleman's Tiger Global LP) that claim that Porsche caused over $1 billion of losses by cornering the market in VW shares.
The funds said that Porsche had made a public announcement that it didn’t have any plans to take a 75% stake. However, the funds stated that Porsche created a "massive short squeeze" in October 2008 by secretly purchasing almost all freely traded ordinary VW shares as it tried to take over the company.