In a press release issued late yesterday, Volkswagen announced that it has reached a "comprehensive agreement for an integrated automotive group with Porsche."
According to the Financial Times: "VW said the companies had settled on a value of €12.4bn for Porsche AG, the car-producing subsidiary of the Porsche holding company. Taking Porsche's debt into account, VW said it would pay up to €3.3bn [$4.7 billion] for the stake, while the companies put an enterprise value of €3.55bn on the operating business of Porsche Holding Salzburg." VW will buy Porsche Holding Salzburg as well.
"This is a marked change in affairs since Porsche, which still controls a stake of roughly 20 percent of VW, attempted to buy VW earlier this year," comments Jalopnik.
Market Watch explains: "The deal follows a failed attempt by Porsche to take over its bigger rival. Porsche amassed over 10 billion euros of debt after building a roughly 50% stake in Volkswagen and acquiring options on around another 20%. But it was unable to sustain the high levels of debt and was eventually forced to seek help from Volkswagen."
A group of investors from Qatar are in negotiations to acquire the options Porsche holds in VW. "Volkswagen said Friday that the planned deal is conditional on the successful sale of those options, which would make Qatar the group's third biggest shareholder," writes Market Watch.
Jalopnik reports, "Sales projections for the combined companies are estimated at more than $171 billion from as many as 6.4 million vehicles."
Though VW asserts that "Porsche's independence will be preserved," automotive blogs are buzzing with possibility that the acquisition will result in the resurrection of the once-successful Auto Union. In either case, "[c]omplete integration (or assimilation) of the companies is expected by late 2011 with current VW CEO Martin Winterkorn at the helm," writes Autoblog.
Check out both Volkswagen's and Porsche's latest lineup with US New's Rankings and Reviews.
