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Business

VW may raise four billion euros for Porsche deal, says report

Text by NEWS WIRES

Latest update : 2009-07-27

According to a Financial Times report, European biggest automaker Volkswagen could raise capital of up to four billion euros to protect its credit ratings from falling as the company finances its upcoming takeover of Porsche.

AFP - Volkswagen, Europe's biggest automaker, could raise fresh capital of up to four billion euros (5.7 billion dollars) to finance the takeover of its main shareholder Porsche, a report said Monday.

On Thursday, VW said it would take control of the sports car icon after a lengthy battle for which of the two companies, linked by strong controlling family ties, would come out on top of a new group aiming to challenge Toyota to be the world's number one auto company.

Porsche ended up with 10 billion euros of debt as it built up a controlling stake in VW and this cost ultimately weakened its own position.

The Financial Times said Volkswagen wanted to buy Porsche’s sports car business as fast as possible and so was considering strengthening its capital base to do so.

Raising fresh funds for the Porsche takeover, estimated to cost eight billion euros, will protect VW's credit ratings, the report said.

VW, which is poised to start looking into Porsche’s books in the coming days, declined to comment, it said.

VW and Porsche plan to decide on the structure of the combined group by August 13, it added.

Date created : 2009-07-27

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