Porsche joining with Volkswagen?

Mergers and combines are the order of the day and now it seems that the family members who own Porsche and Volkswagen may be coming together to revive the fortunes of both the companies which have been hit hard by the recession.

The iconic Porsche has a debt of $12.27 billion; it also holds 51 percent of VW’s voting stock. However, it is looking for an investor in the Middle East to help it out. The feuding family has internal problems as well as Christian Wulff, the premier of VW’s home state of Lower Saxony, who owns just over 20 percent of VW, can veto significant decisions at Europe’s biggest carmaker.

Both Porsche and VW’s chairmen issued a joint statement saying that they were working towards a settlement: ‘Both companies will advance efforts towards this goal in a constructive way and in mutual agreement with all the parties concerned,’ the statement said. The situation is volatile, though, because thousands of Porsche workers walked off their jobs in protest against the merger.

This merger will effectively be a defeat for Porche as the company had been planning a takeover of Volkswagen, a company much larger than Porsche both in size and revenue, for some time, but it seems that particular deal could not be achieved owing to Porche’s current debts and the fact that Volkwagen is much much bigger as well as the family owners of Volkswagen being determined not to be swallowed up.