Shares in luxury carmaker Porsche were indicated as much as 6 percent weaker on Monday and Volkswagen stock traded up 2 percent after weekend news that Porsche planned to take a 20 percent stake in VW.
"We assume, given the talk in the market of a size buyer of VW stock and the 14 percent rise over the last 2 weeks, that Porsche has already made a start on its 20 percent target," said Michael Tyndall, autos analyst at Nomura in London.
Porsche said it now held less than 5 percent of VW and may have to buy more in the market to build a 20 percent voting stake, which would be worth 3.3 billion euros ($4.01 billion) at Friday's closing prices.
Lower Saxony, VW's home state, is the largest shareholder now with 18.2 percent of VW voting rights and reaffirmed on Sunday it was committed to holding its VW stake. Volkswagen holds a 13 percent voting stake in treasury shares.
But VW has made clear in the past it cannot sell its treasury shares unless this is linked to an acquisition. For instance it planned to sell a big stake to the Gulf emirate of Abu Dhabi to help finance the acquisition of fleet management business LeasePlan, but these talks fell through.
"Porsche's move comes as a surprise to us and may receive mixed messages from the market," Morgan Stanley said in a note to clients, reports Reuters.
According to BBC, Volkswagen has welcomed the move, saying a stable shareholder structure was important for its long-term business prospects.
Its shares have surged amid speculation that a large investor was building a stake in preparation for a takeover.
The stock added 17% last week, closing at a three-year-high of 51.86 euros on Friday. Trading volumes also have jumped to many times the daily average.
VW's other main shareholder is the German state of Lower Saxony, which owns an 18.2% stake.
Together, the local government and Porsche would control a majority of voting rights in VW.
Porsche shareholders were less pleased about the move, with some complaining that the money could be better spent elsewhere and the deal would hurt the value of their investments.