Porsche shows there's a middle way on splits

Porsche AG, the maker of the 911 sports car, shows there's a middle ground between the typical company's approach to stock splits and the no-split-ever policy that Berkshire Hathaway Inc follows at Warren Buffett's behest.

The automaker, based in Stuttgart, Germany, said on Monday that it plans a 10-for-1 stock split and will ask shareholders to approve the proposal in January.

The ratio was the same as the company's previous split, completed in April 2001.

Porsche made the announcement after the stock rose as high as 1,868.5 euros - equivalent to about $2,700, near the $3,000 price at the time of the earlier split.

Aside from Sachsenmilch AG, a dairy-products maker, the stock is the most costly out of 683 companies in the benchmark CDAX Performance Index. Berkshire carries the highest price tag among stocks listed on US exchanges, thanks to Buffett's shunning of splits.

Class A stock of the Omaha, Nebraska-based company closed on Monday at $133,710 apiece. Class B shares, equivalent to one-thirtieth of the A shares in terms of ownership, closed at $4,469.

Banco Santander SA's decision to sell Banca Antonveneta SpA even before completing its takeover of the Italian bank may ease the financial pain from an unprofitable US investment.

Santander, Spain's largest bank, bought almost 25 percent of Sovereign Bancorp Inc's shares last year.

Sovereign, based in Philadelphia, trades for about half the average price paid by Santander, named for its headquarters city. The drop has reduced the value of its holding by about $1.47 billion.

Under the terms of the purchase, Santander has to keep its shares for another three and a half years. While the bank can seek to buy the remaining stock in a three-year period starting next June, any offer made within the first 12 months has to exceed $38 a share, more than triple Monday's close of $12.33.

All this means Santander is stuck with its Sovereign stake for some time.

The bank, which is buying Antonveneta as part of a purchase of ABN Amro Holding NV's Italian and Brazilian units, might content itself with selling to Banca Monte del Paschi di Siena SpA for $3.4 billion more than an earlier valuation.

David Wilson is a Bloomberg News columnist. The opinions expressed are his own

(China Daily 11/14/2007 page16)