Volkswagen Will Acquire the Remaining 50.1% Porsche Stakes for $5.6 Billion
Volkswagen (VW), German automobile manufacturer, is finalizing the takeover of Porsche, sports car manufacturer, by the end of this month. The two companies are agreed in 2009 to merge by 2011 but the deal belated due to official obstacle of a huge tax bill for both of the companies as reported by BBC.
According to the German firm, Porsche AG would become a fully-integrated brand of the Volkswagen group from August 1 after taking over of the remaining 50.1% stake in the sportscar unit of Porsche Automobil Holding SE. VW will pay 4.46 billion euros ($5.6 billion; £3.6 billion) plus one VW common share to acquire the stake. VW acquired 49.9% of stake in Porsche in 2009.
"The unique Porsche brand will now become an integral part of the Volkswagen Group. That is good for Volkswagen, good for Porsche and good for Germany as an industrial location," Volkswagen Management Board Chairman Martin Winterkorn said.
According to various reports, the two firms would have to pay more than 1 billion euros in taxes, if the remaining stakes will be bought before 2014 but analysts have reported that by building the deal by payment of one VW common share to Porsche, as the company has done, the firms may become able to keep them away from that bill. However, this deal will be more accurately called as restructuring of the company rather than a takeover under Germany's so-called reorganization tax law as reported by Reuters UK.
This finalization of the deal will increase VW’s earnings while reducing cost and this strategy would help the company to become the world’s biggest automaker.
"The accelerated integration will allow us to start implementing a joint strategy for Porsche's automotive business more quickly and to realize key joint projects more rapidly," said Hans Dieter Poetsch, chief financial officer of Volkswagen.
"It's a great deal for Volkswagen, both financially and in operative terms," said David Arnold, an analyst with Credit Suisse. Moreover, Volkswagen said in a statement that "the accelerated integration model that has now been agreed can be implemented on economically feasible terms".
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