Hedge funds suing Porsche suffer setback at German court

Mon Feb 10, 2014 10:36am EST

* Stuttgart judge sees "litigation risks" for plaintiffs

* Porsche rejects accusations, rules out any settlement

STUTTGART, Germany Feb 10 (Reuters) - Hedge funds suing Porsche SE for 1.36 billion euros ($1.85 billion) over its failed attempt to take over Volkswagen in 2008-2009 suffered a setback at a German court on Monday.

The regional court in Stuttgart, where sports-car maker Porsche is based, expressed strong doubts about the case brought by hedge funds including Viking Global Investors, Glenhill Capital and Greenlight Capital.

"We see considerable litigation risks for the plaintiffs," judge Carola Wittig said during the hearing. "There's a whole series of obstacles that need to be overcome."

Plaintiffs say that throughout 2008 Porsche's holding company camouflaged its plans to acquire much-bigger Volkswagen (VW) and secretly piled up its holding in Europe's largest automaker.

In March 2008 Porsche SE dismissed as "speculation" talk that it intended to take over Volkswagen (VW). Seven months later Porsche SE said it controlled 42.6 percent of VW's common shares and held options for another 31.5 percent of the stock it had not disclosed previously.

Porsche SE'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 short-sellers raced to buy back stock they had borrowed to bet that VW shares would drop.

Porsche SE has repeatedly denied all allegations and ruled out any settlement ahead of Monday's hearing.

The holding company is faced with a total of 5.7 billion euros of damage claims through a number of investor lawsuits pending at various German courts.

($1 = 0.7343 euros) (Reporting by Ilona Wissenbach Writing by Andreas Cremer; Editing by Mark Potter)

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