FRANKFURT: A group of investment funds is seeking nearly 2 billion euros ($2.60 billion) in compensation from Porsche Automobile Holding SE for losses incurred in a "short squeeze" as Porsche attempted to take over larger rival Volkswagen AG in 2008.
A spokesman for Porsche rejected the complaint, which follows other cases against it that have so far been unsuccessful.
"The accusations mentioned are not new and we reject them," he said, adding that the company had not been officially informed of the claim against it.
Porsche abandoned the takeover attempt in 2009, saddled with debt just as global markets collapsed, and agreed to pursue a merger that was supposed to be concluded this year. The lawsuits have been a major obstacle to completing that merger.
The complaint was filed on Friday with the district court in Stuttgart, the southern city where Porsche's headquarters is located, a statement issued on Saturday on behalf of the plaintiffs showed.
The plaintiff's statement said Porsche had secretly built derivative positions covering almost all of Volkswagen AG's freely traded shares. Those positions triggered "a massive short squeeze and finally released billions of euros worth of shares into the short squeeze for its own profit," it added.
When Porsche revealed it controlled 74.1 percent of VW's voting stock in October 2008, shares of Volkswagen briefly topped 1,000 euros apiece, making the company the world's biggest by market value. This led to a short squeeze, in which funds that had bet on a decline in the stock price were forced to sell out of those positions and post losses on them.
"One of the focal points of the complaint is Porsche's press release that triggered the short squeeze," the plaintiff's statement said.
"For the first time, after strong denials in the weeks and months before, Porsche SE confirmed that it wanted to cross (the) 75 percent (shareholding) and implement a domination agreement which would give it full control over VW and its liquidity," the statement added.
Sources close to the funds identified the plaintiffs as Elliott Associates, L.P., Elliott International, L.P., The Liverpool Limited Partnership, Perry Partners L.P., Perry Partners International, Inc., DE Shaw Valence International Inc., and York Capital Management Europe (UK) Advisors, LLP.
They are represented in Germany by the Broich Law Office.
Porsche has already been the subject of lawsuits in Germany and the United States which have so far failed alleging it quietly bought up the shares as part of a plan to take over Volkswagen while saying publicly it had no plans to do so.
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