Lower Saxony, the second-largest shareholder in Volkswagen AG, plans to sell shares in the carmaker to help narrow the state government's budget deficit, Finance Minister Hartmut Moellring said.
But the northern German state has no plan to reduce its blocking minority of 20.01 percent in VW, Moellring said. The state's government aims to raise 200 million euros ($261 million) and fashion a deal in a way that would preserve Lower Saxony's voting rights in VW, said a government official who asked not to be identified because the plan is confidential.
Under Germany's so-called Volkswagen Law, Lower Saxony may block major decisions by the carmaker.
Porsche's holding company owns 50.7 percent of VW's ordinary shares, which carry voting rights. Qatar Holding, part of the country's sovereign wealth fund, has 17 percent of the voting rights.
“We'll keep our stake above 20 percent,” Moellring said, adding that a sale would be aimed at plugging a 1.8 billion-euro gap in Lower Saxony's 2011 budget plan.
Volkswagen's ordinary shares fell as much as 1.4 percent intraday to 72.09 euros. The stock traded at 72.91 euros, or 0.3 percent higher, as of 1:57 p.m. CET in Frankfurt.
Lower Saxony Prime Minister David McAllister said in a June 24 interview with Bloomberg that he stands “rock solid” behind the state's 20 percent stake in the automaker.
Volkswagen is acquiring Porsche's sports-car business after Wendelin Wiedeking, former CEO of Porsche's sports car business, failed to use options transactions to take over VW.
Resistance from Christian Wulff, McAllister's predecessor, last year helped prevent Porsche from achieving its plan to buy 75 percent of VW, a holding that could have given it access to VW's cash.
Lower Saxony is home to five of the six western German VW plants and the state has maintained a voting stake of at least 20 percent in the carmaker ever since the company was privatized in 1960.
Roughly eight out of every ten jobs at VW's brand's total German workforce are located in the state, which has traditionally had a strategic interest in maximum employment.
Lower Saxony could have cashed in on its VW ordinary shares when they were each trading around 200 euros ($261.4) or more during the period that Porsche SE was looking to acquire control of VW.
But the state opposed Porsche dominating VW and refused to sell despite the sky high price. Eventually Porsche Automobil Holding SE's attempt failed and the company agreed last July to be subsumed into Volkswagen next year.
Bloomberg and Reuters contributed to this report