An expanded legal investigation of Porsche SE's former top executives might delay or even jeopardize a planned full merger with Volkswagen AG, the sports car maker said.
Former Porsche executives are now also under investigation for breach of trust over allegations they took on risks that threatened the company's survival in a takeover battle with Volkswagen, Stuttgart prosecutors said Thursday.
They didn't identify the executives concerned, but Porsche's former CEO Wendelin Wiedeking and ex-CFO Holger Haerter are already under investigation on allegations of market manipulation.
Porsche accumulated huge debt after it tried to attempting to take over Europe's largest automobile maker Volkswagen in 2009, which eventually rescued its much smaller peer, becoming its biggest shareholder with a view to taking full control.
In addition to the breach of trust probe, prosecutors in Stuttgart _ where Porsche is based _ said that three Porsche executives are now under investigation for credit fraud over allegations they gave banks involved in the takeover financing "false or incomplete information."
The three were not identified, in line with German privacy laws.
Porsche, the maker of the 911 and Panamera sports cars, said in a statement late Wednesday the prosecutors' investigation, which was first started in 2009, will be concluded at the earliest in 2012, making the planned conclusion of the merger with Volkswagen this year unlikely.
The company's board warned that further delays would reduce the chances of the full merger altogether, Porsche Automobil Holding SE said.
The outcome of the legal investigations will determine whether Porsche will face costly lawsuits from shareholders over wrongdoing in the takeover battle _ and Volkswagen appears keen on staying away from fully consolidating the sports car manufacturer until that risk can be ruled out.
Volkswagen's shares were down 2.9 percent in Frankfurt trading to euro113.25, and Posche's shares dropped sharply _ falling 8.8 percent to euro56.20.
Volkswagen, based in Wolfsburg, now holds a 49.9 percent stake in Porsche.