Volkswagen AG, Europe's largest carmaker, will pay about 3.3 billion euros ($4.7 billion) for a 42 percent stake in Porsche SE's automotive unit as it executes a gradual merger of the two manufacturers.
Volkswagen will fully integrate the maker of the 911 sports car in 2011 as long as all merger requirements are met, the companies said yesterday in separate statements. Volkswagen plans to issue new preferred shares in the first half of next year to help pay for the purchase, which values Stuttgart, Germany-based Porsche's car division at 12.4 billion euros.
Volkswagen Chief Executive Officer Martin Winterkorn said the merged carmaker's operating profit will increase by 700 million euros annually. Winterkorn will be CEO of the Porsche SE holding company as of Sept. 15 and VW's chief financial officer, Hans Dieter Poetsch, will take the same role at the company.
"The merger seems kind of odd because the companies work together anyway, so they clearly don't need to own one another to work together," said Stephanie Brinley, an analyst at AutoPacific Inc. in Troy, Michigan. "The story reads like a personal war instead of a strategic purchase, but that doesn't mean VW can't make it work."
The manufacturers announced plans in July for a transaction that would include a state-owned Qatari investment fund buying 17 percent of Wolfsburg, Germany-based Volkswagen and a possible holding in Porsche. Winterkorn said Qatar will be a "strong partner" for VW.
Full story
Gasgoo: auto parts source
