MUNICH German holding company Porsche SE (PSHG_p.DE) plans to use its 2.6 billion euros ($3.4 billion) in cash to invest in mid-sized companies, it said on Tuesday, killing off investor hopes of a special dividend.
"We are first and foremost going to focus on the major global trends in the automotive industry such as sustainability, conservation of resources and the increasingly networked automotive world," Chief Executive Martin Winterkorn said in a statement on Tuesday.
Porsche, which is still controlled through voting shares by the Porsche and Piech families while ordinary investors hold preference shares, has been searching for a new business model ever since investor lawsuits forced it to ditch plans to be taken over entirely by Volkswagen (VOWG_p.DE). Instead it was left holding the cash and a 50.7 percent ordinary shareholding in VW after selling the carmaking business alone.
Many of the preference shareholders in Porsche SE, who had earlier bought into the company in the expectation of a full merger with VW, have since demanded the company return the cash.
But management then hired Rothschild banker Philipp von Hagen to find prospective investments, in everything from renewable energy to real estate, and some investors fear this could further increase the discount to net asset value at which the holding company's preference shares (PSHG_p.DE) trade.
Barring acquisitions, Porsche said it should report a profit after tax in the low single-digit billions of euros for the next two years based on the current group structure.
Porsche SE is also still fighting legal claims that at one point totaled $3.9 billion after U.S. hedge funds, who were caught short of ordinary shares in Volkswagen in 2008 after it emerged that Porsche had effectively cornered the market through the use of call options, contended that they had been misled over Porsche's plan to acquire Volkswagen (VOWG_p.DE).
"We continue to consider all pending claims against Porsche SE to be without merit - and those in the United States and the United Kingdom to be legally inadmissible," Winterkorn said.
"And we will continue to use all legal means at our disposal to defend ourselves against the damage claims filed."
Recently 12 of a total of 32 plaintiffs withdrew their appeal against the dismissal of their claims against Porsche SE by a U.S. federal court.
This does not affect the appeal proceedings relating to the remaining 20 plaintiffs, Porsche SE said, adding that more claims are likely to be filed in Germany.
A spokesman for the company declined to put a figure on the current outstanding claims made against the company.
(Editing by Greg Mahlich)