Volkswagen is to take a 42 per cent stake in sports carmaker Porsche for Euro 3.3bn (£2.8bn) by the end of 2009.

The plans will culminate in the merger of Porsche with Volkswagen which is expected to be completed in 2011 and will require the approval of both companies' shareholders.

Remain independent

Porsche is to remain an independent company headquartered in Zuffenhausen.

Negotiations are also ongoing with the Emirate of Qatar to acquire options on Volkswagen shares

Professor Martin Winterkorn, chairman of Volkswagen board of management, said:

"Volkswagen and Porsche today took a decisive step towards a joint future.

"As a group with now ten strong, independent brands we will further expand our unique global position."

Protracted battle

The merger, with Volkswagen taking the lead role, comes after a protracted battle between the two companies, which led to the departure of Porsche's chief executive Wendelin Wiedeking with the largest pay-off in German corporate history.

Earlier Porsche had tried to take control of Volkswagen, borrowing heavily, but it was forced to back track with the financial downturn and the burden of servicing heavy debts.

The combination of Volkswagen and Porsche will see the emergence of a car group with sales of 6.4 million vehicles and more than 400,000 employees.

DATED: 19.08.09

FEED: MT