PORSCHE'S DRAMATIC takeover of Volkswagen is heading for an expensive endgame after shares in Europe's largest car company tripled in value yesterday.

VW shares briefly topped the €1,000 mark in trading yesterday, making it for a short time the world's largest company by market capitalisation, before closing up 82 per cent at €945.

The final stage of Porsche's two-year takeover has proven costly for the Stuttgart-based luxury car company. After sitting for months on its 31 per cent stake, claiming no interest in increasing its share, it started a spending spree that drove up the share price.

The smaller company now holds 74 per cent of the stock and options of its larger competitor, just short of a 75 per cent controlling stake.

The deal's dramatic end has proven costly for short-sellers too. After betting on a falling VW share price, they scrambled yesterday to buy shares at more than €1,000 a piece after Porsche announced on Sunday that it controlled 74 per cent - all but 6 per cent of freely-traded stock.

Porsche reacted angrily to suggestions yesterday that it had manipulated the market in the closing stages of the deal. "We reject vehemently the accusation of share-price manipulation," said a spokesman. "The ones responsible are those who speculated with huge sums of money on a falling Volkswagen share price."

In its statement on Sunday, Porsche said the disclosure was to give investors who had been short-selling stock "the opportunity to close their positions unhurriedly and without bigger risk".

Short-sellers have been borrowing VW stock from institutional investors and selling it in the hope of buying it back later more cheaply, pocketing the difference.

Their logic was that VW would decline in value once Porsche gained full control. But instead the price has soared, fuelled by Porsche's spending spree.

Porsche's newfound confidence comes from changes it has forced in VW company structure to permit outside shareholder influence on decision-making for the first time.

Most significantly, the European Commission has announced fresh plans to force Berlin to drop its "VW law" that guarantees state control of the company with its 20 per cent holding.

After months of feuding between the two companies, and with the takeover all but assured, top managers from VW and Porsche put on a show of unity yesterday, saying they "stand united behind all company decisions".