Volkswagen Wraps up Porsche Takeover Two Years Early

VW initially acquired a 49.9% stake in Porsche in 2009 in the first stage of a complex takeover agreement, the completion of which since has run into a number of legal and tax hurdles.

Volkswagen is set to finalize its takeover of Porsche two years earlier than planned in order to unlock hitherto untapped economies of scale.

In a statement issued late Wednesday, the two automakers -- which have been seeking to merge since 2009 -- said they have found a way to integrate their two businesses "some two years earlier than would have been economically feasible" under their previous plans.

Under the deal, which they said will unlock 320 million euros ($400 million) in net synergies, Volkswagen (IW 1000/10) is to pay Porsche's current holding company, Porsche SE, 4.46 billion euros plus one VW share for the 50.1% it does not already own in the sports-car maker.

VW initially acquired a 49.9% stake in Porsche in 2009 in the first stage of a complex takeover agreement, the completion of which since has run into a number of legal and tax hurdles.

Prior to VW's takeover of Porsche, the sports-car maker had itself tried, but failed, to swallow the much larger VW, running up more than 10 billion euros of debt in the process.

When VW announced its takeover plans for Porsche in 2009, its initial goal was a merger with Porsche SE, which currently holds a 50.7% stake in VW and a 50.1% stake in Porsche AG.

But it quickly shelved such ambitions in the face of dozens of lawsuits by hedge-fund investment managers seeking billions of dollars in damages from Porsche related to the failed takeover attempt.

Under the new merger structure, which also has the advantage of averting massive tax payments for VW, Porsche SE "will contribute its operations as a holding company, including its 50.1% Porsche stake, to Volkswagen AG, which already holds indirectly 49.9% of Porsche AG.

"Once the transaction has closed, Volkswagen will hold 100% of the shares of Porsche AG via an intermediate holding company," it explained.

Volkswagen CEO Martin Winterkorn said the accelerated merger deal will benefit customers, employees and shareholders alike.

"The unique Porsche brand will now become an integral part of the Volkswagen Group," Winterkorn said. "That is good for Volkswagen, good for Porsche and good for Germany as an industrial location. Combining their operating business will make Volkswagen and Porsche even stronger -- both financially and strategically -- going forward."

"We can now cooperate even more closely and jointly leverage new growth opportunities in the high-margin premium segment."

VW's brands currently include Volkswagen, Audi, Skoda, SEAT, Bentley, Bugatti and Scania and MAN trucks.

Copyright Agence France-Presse, 2012   

TAGS: The Economy
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