VW in 3.3bn Porsche deal
VOLKSWAGEN (VW) agreed to buy a 42 per cent slice of the sports car arm of Porsche yesterday, in another key step towards combining the German carmakers into a European automotive giant.
VW said it would pay up to €3.3bn (£2.84bn) this year for an initial stake in the debt-ridden Porsche unit, ahead of the creation of an “integrated” carmaking group by the end of 2011.
To finance the purchase, Volkswagen said it plans to issue preference shares to boost its capital levels some time in the first half of 2010.
The tie-up is just the latest in a nearly four-year long series of tie-ups between the two firms, that initially started with Porsche taking a 10.3 per cent voting stake in VW in 2005.
Porsche’s surrender comes at the end of a power struggle lasting months that eventually led to the departure of its chief executive Wendelin Wiedeking.
Volkswagen chief executive Martin Winterkorn, who is poised to run the combined entity and was named head of Porsche last week, said the deal marked “a new era” for both companies. He said: “Porsche is a real enrichment for our company’s portfolio.” VW’s powerful labour chief Bernd Osterloh welcomed the deal.