Wednesday, August 19, 2009
VW agrees Porsche merger details
Volkswagen (VW) and Porsche have agreed the details under which VW will merge with its German compatriot by 2011.
Under the deal, VW will initially buy a 42% stake in Porsche by the end of this year for 3.3bn euros ($4.7bn; £2.8bn).
The deal ends months of acrimony between the two firms, and concludes Porsche's failed efforts to buy VW.
Over the past year Porsche built up major debts to get a 51% stake in VW, only to fall short of the required 75% when it could not raise more funds.
Funding failure
Porsche's failure to buy VW saw the firm's former chief executive Wendelin Wiedeking and financial director Holger Haerter resign "with immediate effect" last month.
It failed to raise the funds to increase its shareholding in VW above 51% due to the impact of both the global credit crunch and the slump in global car sales.
Porsche will now effectively become the 10th brand in the VW family, joining the likes of Audi, Seat and Skoda.
However, VW has pledged to maintain Porsche's "independence".
It added that VW would "preserve" its own "solid financial base".
The deal values Porsche at 12.4bn euros.
'New era'
VW chief executive Martin Winterkorn said the announcement marked "a new era" for the two firms.
"Porsche is a real enrichment for our company's portfolio," he said.
Mr Winterkorn added that the Porsche and Piech families will be the largest shareholders in the merged firm.
Meanwhile, VW's home state of Lower Saxony, which owns a 20% stake in the firm, will retain the right to block important decisions.
DATED: 19.08.09
FEED: AW
