Porsche secretly bought 74% of VW shares — then VW took over Porsche

In 2005, Porsche began secretly buying Volkswagen shares. The plan was audacious: despite being a much smaller company (Porsche made 10,000 cars a year to VW's 6 million), Porsche intended to take over Volkswagen. Porsche used cash-settled options to build its stake without triggering disclosure thresholds, allowing it to accumulate shares in secret. By 2007, Porsche held 30.9% of VW and officially triggered a takeover bid, which it dismissed as a 'formality.'

On 26 October 2008, Porsche announced it effectively controlled 74% of Volkswagen shares through a combination of direct holdings and options. Hedge funds that had bet against VW — expecting the stock to fall — were caught in the most devastating short squeeze in history. VW's stock price surged from €200 to over €1,000 in a single day, briefly making VW the most valuable company in the world. Porsche's paper profits on its VW options were enormous.

But the victory was hollow. Porsche had financed its stake-building with massive borrowing, and the paper profits on the options triggered huge tax liabilities. The 2008 financial crisis made refinancing impossible. Porsche was facing over €10 billion in debt. The strategy reversed: in August 2009, Volkswagen agreed to take over Porsche's automotive business. CEO Wendelin Wiedeking was ousted. By 2012, VW owned Porsche entirely. The company that tried to swallow Volkswagen had been swallowed by it.