Porsche VW Explore Merger Under One Brand - Plans of VW Takeover Halted

It appears Porsche Automobil Holding SE is shelving its plan for a takeover of Volkswagen Group and is trying another approach at forming some sort of merger with Wolfsburg-based VW Group.

The two German automakers have formed a working group at VW headquarters in Wolfsburg to work out the details for a merger. The VW-Porsche working group is made up of representatives from both automakers, as well as from worker councils and the state of Lower Saxony, where VW Group is based, which owns a 20 percent stake in VW giving it veto power over all strategic decisions.

The working group has not released many details about the plan, but say they have come up with a blueprint that both parties have agreed to. The two automakers will form a single automotive company with 10 brands, including Porsche, which Porsche Holding currently operates on its own. VW Group consists of 9 brands which include Audi, Seat, Skoda, Scania, Lamborghini, Bentley, Bugatti, VW Commercial Vehicles and Volkswagen passenger cars.

Porsche has run up a debt of over 9 billion euros in buying up VW stock in its attempted takeover. It holds a 51 percent share of VW and had earlier planned to take that share to 75 percent but has now set that goal aside. According to Reuters' sources, Porsche will inject 5 billion euros into the new company upon its formation in 2009 or 2010. It is not clear yet whether Porsche Automobil Holding SE will still remain a separate company.

Press Release

Family shareholders are in agreement:
Creation of an integrated car manufacturing group intended

Stuttgart. The members of the management boards of both Volkswagen AG and Porsche Automobil Holding SE have been in intensive talks about the deepening of the cooperation over the past weeks. The family shareholders of Porsche Automobil Holding SE, Suttgart, have discussed the proposals resulting therefrom, with the inclusion of capital measures, this Wednesday and argued for the creation of an integrated car manufacturing group. In the final structure ten brands shall stand below an integrative leading company alongside each other, whereby the independence of al brands and explicitly also of Porsche shall be ensured.

On this basis both companies Volkswagen and Porsche intensify the talks in a joint working group with the relevant involvement of the State of Lower Saxony as largest co-shareholder as well as the employee representatives of both companies. It is the aim to develop a corresponding basis for decision-making on the future structure of the common group within the next four weeks.