Volkswagen's Board Approves Porsche Merger Plan, Qatar Stake
July 23 (Bloomberg) -- Volkswagen AG, Europe’s largest carmaker, said its supervisory board agreed on a plan to combinewith Porsche SE in a bid to end the battle for control of thetwo German manufacturers.
An integration of Volkswagen with the 911 sports-car makerwill benefit both automakers in the global market, ChiefExecutive Officer Martin Winterkorn told reporters today inStuttgart, Germany. A Qatar investment fund will acquire 17percent of VW, becoming the third-largest investor in theWolfsburg-based company, he said.
Volkswagen and Porsche, which said on May 6 that they werein talks to merge, have been at loggerheads about ways to cutPorsche’s 10 billion euros ($12.8 billion) of debt. Porsche CEOWendelin Wiedeking agreed today to step down after 16 years,paving the way for a combination of the two carmakers. Porsche,controlled by the Piech and Porsche families, owns about 51percent in VW. The German state of Lower Saxony is the second-largest shareholder with a 20 percent stake.
“There’s already a high degree of cooperation” betweenPorsche and VW, said Frank Schwope, an analyst with NordLB inHanover, Germany. “A combination of both makes good sense.”
Porsche’s headquarters will remain in Stuttgart, LowerSaxony Prime Minister Christian Wulff said after a meeting ofVW’s supervisory board. Qatar will be a “reliable”shareholder, he said.
The carmakers will work on details of the integration inthe next three weeks, VW’s Winterkorn said.
Qatar will receive the 17 percent VW stake as part of atransaction with Porsche SE to take over options that can beconverted into VW shares, a person familiar with the situationsaid earlier. The Persian Gulf state will at the same timeprovide a 750 million-euro loan to Porsche, said the person, whoasked not to be named because the discussions are private.
A spokesman at the Qatar Investment Authority declined tocomment when reached by Bloomberg.
To contact the reporter on this story:Andreas Cremer in Stuttgart, Germany via acremer@bloomberg.net;Chris Reiter in Stuttgart, Germany via creiter2@bloomberg.net.
Last Updated: July 23, 2009 09:18 EDTSource: Bloomberg
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