Volkswagen shares surge as U.S. Dieselgate deal looms
FRANKFURT (Reuters) - Volkswagen (VOWG_p.DE: Quote) shares jumped more than 6 percent early on Thursday on expectations that the carmaker was close to reaching a deal to buy back 500,000 diesel cars in the United States in a step toward resolving an emissions rigging scandal.
Regulators and prosecutors around the world are investigating the German company after it admitted in September to installing software in its cars to cheat exhaust emissions tests, unleashing a scandal dubbed Dieselgate in the media.
Sources told Reuters on Wednesday that VW would offer to buy back almost 500,000 diesel cars in the United States. The carmaker has admitted to cheating on emissions tests for 11 million vehicles worldwide since 2009.
Analysts and shareholders applauded the prospect of a deal, sending VW shares up 6.4 percent to 128.6 euros per share at 0808 GMT to the top of Germany's blue-chip DAX index, which was up 0.2 percent.
"We welcome the fact that VW appears to be pursuing a broad compensation program," said Arndt Ellinghorst, analyst at Evercore ISI.
Two people familiar with the matter said on Wednesday that Volkswagen would raise its provisions to a double-digit billion euro amount from 6.7 billion euros to pay for the buyback and regulatory issues.
Evercore ISI estimates that the costs for cleaning up Dieselgate will reach 11.4 billion euros.
(Reporting by Edward Taylor; editing by Jason Neely)
© Thomson Reuters 2017 All rights reserved.