German sports car maker Porsche has raised its stake in Volkswagen to a level which would automatically trigger a takeover bid.
In a statement Porsche said it had exercised an option on 3.5% of Volkswagen's shares to take its stake in the car maker to 30.9%.
Under German law, a 30% stake in a company obliges the holder to make a full takeover bid. The shares would be transferred on Wednesday.
The move by Porsche, which has been rumoured for some time, seems to be an effort to protect VW from a hostile raid from another source.
In an interview with the Bild newspaper published on Monday, Porsche's CEO Wendelin Wiedeking said: 'If a hedge fund dismantled VW and sold that on the stock market, we would lose our most important partner. We cannot let that happen, that's why we acted.'
The timing is significant because a European court is expected to rule soon against a German law dating from 1960 which caps the voting rights of shareholders at 20%, even if they own a greater share. The European Commission believes the law violates EU legislation.
The move by Porsche to raise its stake also confirms its desire to tighten its control of a company with which it has close historical and industrial links.
Porsche and VW developed the Cayenne and Touareg four-wheel-drive models in a joint venture, and two senior Porsche executives sit on the VW board.
