Don't miss

Replay


LATEST SHOWS

THE INTERVIEW

'Agent Storm': How a radical Islamist became a CIA agent

Read more

WEB NEWS

Web users pay tribute to Boris Nemtsov

Read more

FOCUS

China: New reform set to benefit migrants

Read more

THE OBSERVERS

Caged children in Syria and dumpster diving in Ivory Coast

Read more

IN THE PAPERS

French local elections: April 21st all over again?

Read more

IN THE PAPERS

Nemtsov murder: 'Calculated political violence'

Read more

EYE ON AFRICA

Paul Kagame visits UNESCO HQ in Paris

Read more

BUSINESS DAILY

Samsung hopes to win back lost ground with new phones

Read more

MEDIAWATCH

Flamboyant US Congressman's Instagram lands him in bother

Read more

Business

Volkswagen and Porsche strike merger deal

Video by Nicholas RUSHWORTH , Shona BHATTACHARYYA

Text by NEWS WIRES

Latest update : 2009-08-14

The Volkswagen board has agreed to take over Porsche, buying a 42 percent stake in the company after the luxury car maker attempted to take over VW and ran into great debt.

AFP - The supervisory boards of Europe's biggest auto giant Volkswagen and luxury car maker Porsche said on Thursday they had approved a plan to merge their two companies by 2011.

Under the terms of the agreement, Volkswagen will initially buy a 42-percent stake in Porsche by the end of 2009 for 3.3 billion euros (4.7 billion dollars) in a deal valuing Porsche at 12.4 billion euros, the companies said.

Volkswagen will then increase its capital in the first six months of 2010 by issuing new preferred shares and Porsche will increase its capital in the first half of 2011 by issing ordinary and preferred shares.

The deal comes after months of complex and acrimonious negotiations.

Volkswagen eked out a net profit in the second quarter despite a collapse in demand for cars due to the global economic crisis and it plans to become the world's biggest automaker by 2018 by overtaking Japan's Toyota.

The group will now work to integrate Porsche as its 10th brand, alongside the Audi, Bentley, Bugatti and Lamborghini marques, although the companies stressed on Thursday that Porsche would remain an "independent" brand.

The plan seals the failure of a gamble begun by Porsche's management last year to take over the far larger VW in what would have been one of the most spectacular corporate operations in German history.

The deal also marks a victory for VW chairman Ferdinand Piech, grandson of the inventor of the VW Beetle and nicknamed "the patriarch" by German media, who has been planning the tie-up with Porsche for years.

 

Date created : 2009-08-13

COMMENT(S)