AD swoops on VW stake

Abu Dhabi Government officials have concluded a deal with Volkswagen under which Abu Dhabi's state-owned Mubadala Development Company will acquire LeasePlan, Europe's leading car fleet-management firm, together with Volkswagen and a Saudi partner, from Dutch bank ABN Amro for a total of $2.4 billion.

Volkswagen chief executive Bernd Pischetsrieder said its supervisory board would approve a sale of a stake in VW to Abu Dhabi. Abu Dhabi is interested in acquiring a stake that could be as high as 10 per cent in Europe's largest carmaker. But VW and Abu Dhabi have not yet agreed on the size of the stake, according to Pischetsrieder.

Sheikh Hamdan bin Zayed Al Nahyan, Deputy Prime Minister and Minister of State for Foreign Affairs, took part in a formal signing ceremony in Berlin later last week with Christian Wulff, Premier of Lower Saxony, the German state that is a major VW shareholder.

Abu Dhabi's purchase of a stake in VW would fund VW's 50 per cent share of the LeasePlan venture. The move also gains the car firm a friendly shareholder as pressure mounts on Berlin to scrap its takeover defences from the European Commission.

Pressure from the European Commission to remove a law that gives VW's home state effective control with a voting stake of 20 per cent may encourage VW to raise funds by selling shares to Abu Dhabi rather than distributing them more widely.

Observers welcomed the LeasePlan purchase, saying it would reduce Volkswagen's dependence on the mass car market and increase its exposure to lucrative fleet management and after-sales services for corporate clients. Abu Dhabi's Mubadala is expected to hold 25 per cent of the new venture and the Saudi-owned Olayan Group the remaining 25 per cent.