Nov. 15 (Bloomberg) -- Porsche AG, maker of the Cayenne sport-utility vehicle, plans to sell as much as 8 billion euros ($10.2 billion) in new stock to fund possible acquisitions and boost its stake in Volkswagen AG to 29.9 percent.

Porsche aims to increase common and preferred stock by 8.75 million shares, or 50 percent, the Stuttgart, Germany-based carmaker said in a statement today. Net income in the year through July 31 rose 79 percent, Porsche said.

Chief Executive Officer Wendelin Wiedeking unexpectedly bought shares in Volkswagen, Europe's largest carmaker, in September 2005 to protect Porsche's biggest supplier from a possible takeover. Porsche said today that the supervisory board authorized increasing the stake from the current 27.4 percent.

``This is obviously going to intensify the speculation about whether Porsche will completely take over Volkswagen,'' said Horst Schneider, an analyst at WestLB in Dusseldorf. ``It's very difficult to see what the benefits of owning more of the shares, especially at the current price, would be.''

Shares of Porsche in Frankfurt fell 33.97 euros, or 3.7 percent, to 880 euros in the biggest drop since May 23. They have gained 45 percent this year. Volkswagen stock rose 4.25 euros, or 5.3 percent, to a record 84.25 euros.

Porsche shareholder and supervisory board member Ferdinand Piech, who is also chairman of Volkswagen's supervisory board, has increased his influence at the carmaker following an announcement a week ago that Volkswagen Chief Executive Bernd Pischetsrieder would step down, said Schneider. Such a move raises concerns about corporate governance, he added.

``For Volkswagen investors, this isn't optimal,'' said Schneider.

Supplier Role

Volkswagen supplies one-third of Porsche's components and builds the body of the Cayenne at a factory in Slovakia. Volkswagen also plans to build the body of Porsche's new four- door sports car, the Panamera, which goes on sale in 2009.

Porsche raised its Volkswagen stake six weeks after the Wolfsburg, Germany-based Volkswagen announced the purchase of a 15.1 percent holding in MAN AG to become the largest investor. MAN is Europe's third-biggest truckmaker.

Pischetsrieder said in October that he wants to combine Volkswagen's heavy-truck operations in Brazil with MAN and Scania AB, Sweden's second-biggest commercial vehicle maker. MAN has made a 10.3 billion-euro hostile takeover bid for Scania. Volkswagen is also the Swedish company's biggest shareholder.

Porsche has a total 17.5 million shares outstanding, split evenly between preferred, or traded, stock and ordinary stock held by the Porsche family.

2006 Profit Gains

Porsche's full-year net income rose to 1.39 billion euros, or 78.22 euros per preferred share, from 779 million euros, or 44.74 euros, a year earlier. Profit beat the 1.03 billion-euro median estimate of eight analysts surveyed by Bloomberg News.

The capital increase ``is the only negative piece of news from Porsche today,'' said Michael Punzet, an analyst at Landesbank Rheinland Pfalz in Mainz, Germany. ``It's the reason for the share decline.''

Sales in fiscal 2006 rose 11 percent to 7.27 billion euros on demand for the new Cayman sports car and the $122,900 turbo- charged 911 model.

Dividend Increase

Porsche plans to raise the dividend to 6 euros for each preferred share, from 5 euros. The total payout is valued at 157 million euros, an increase of 80 percent over the previous year.

Worldwide sales of Porsche's cars and sport-utility vehicles in fiscal 2006 rose 9.5 percent to 96,794 units, the company said Sept. 27. Demand for 911-model sports cars rose 24 percent to 34,386 units. Deliveries of the Boxster, including the Cayman, rose 55 percent to 17,906 cars. Sales of the 4-year-old Cayenne fell 19 percent to 34,134 vehicles.

Earnings were helped by an 80.7 million-euro one-time gain from the 170 million-euro sale of the CTS Fahrzeug-Dachsysteme GmbH automotive-roof division in December 2005 to Magna International Inc., Porsche said.

Porsche's net income as a proportion of sales is the highest in the industry at 19 percent. That compares with 7.5 percent at Toyota Motor Corp., the world's second-biggest carmaker, for the year ended March 31, according to data compiled by Bloomberg.

The 911 Turbo, the most expensive of the 911-model range, starts at $122,900 in the U.S. Porsche's least expensive sports car, the Boxster, is priced at $45,000 while the Cayman costs $58,900. The Cayenne ranges in price from $42,200 to $111,600.

Porsche is spending 1 billion euros to develop the Panamera, the company's first four-door sports car. The model's body will be built at Volkswagen's factory in Hanover, Germany, which makes light commercial vehicles.

The four-seat Panamera will be the third model introduced since Wiedeking took over at Porsche 12 years ago. The automaker expects to sell 20,000 Panameras annually.

Wiedeking's contract was extended for an additional five years, Porsche said today. The supervisory board nominated Hans- Peter Porsche and Ulrich Lehner to succeed departing board members Helmut Sihler, the chairman, and Walther Zuegel.

To contact the reporter on this story: Jeremy van Loon in Berlin at jvanloon@bloomberg.net.

Last Updated: November 15, 2006 14:00 EST