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Porsche, Volkswagen announce merger plan

Porsche, Volkswagen announce merger plan
AFP
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First Published: Thu, May 07 2009. 10 02 AM IST
Updated: Thu, May 07 2009. 10 02 AM IST
Berlin: Luxury car maker Porsche and Europe’s biggest auto producer Volkswagen agreed on Wednesday to forge a merged German car giant, stepping up the momentous changes shaking the industry worldwide.
A special meeting of their boards and key shareholders in Salzburg, Austria gave themselves four weeks to agree a tie up.
Porsche, which had been seeking to take control of Volkswagen, said in a statement that the decision came after weeks of what Porsche called “intensive talks”.
Porsche, which is family owned, said had “argued for the creation of an integrated car manufacturing group” which will now have 10 separate auto brands ranging from Audi, Volkswagen and Porsche in Germany to Czech maker Skoda, Seat in Spain, Lamborghini in Italy, Bentley in Britain and Bugatti.
The Porsche statement said that “the independence of all brands and explicitly also of Porsche shall be ensured.”
But it said “Volkswagen and Porsche (will now) intensify the talks in a joint working group,” it said.
“It is the aim to develop a corresponding basis for decision-making on the future structure of the common group within the next four weeks,” it added, giving no further details.
Volkswagen (VW) issued a separate statement hailing the decision of the Porsche and Piech families, owners of Porsche group, to forge a merger.
The international financial and economic crisis have forced major changes on the world auto industry. Plummeting demand has crippled many manufacturers.
US car giant Chrysler filed for bankruptcy last week, opening the way for Italian champion Fiat to launch a rescue operation and take a key stake. Fiat has also been linked to a potential takeover of Opel, the German arm of US company General Motors.
Fiat’s tie-up with Chrysler would put the Italian firm, which just five years ago was on the brink of collapse, on a par with Volkswagen as the world’s second biggest auto maker after Toyota of Japan.
Stuttgart-based Porsche already holds a majority stake in VW and made an audacious takeover bid for it three-and-a-half years ago.
Reports said last week that VW was considering a counter bid for Porsche, which denied this. Newspapers in Qatar reported the emirate’s Prime Minister Abdallah bin Khalifa Al Thani said he was bidding for a stake in Porsche.
VW has the biggest sales of any car firm in Europe — 15 times larger than its smaller German peer, which is €9 bn ($11 billion) in debt.
The Porsche parent group owns a little more than 50% of VW after boosting its stake in January, and had aimed to raise its stake to 75% until it found itself battered by the global economic slowdown.
Porsche’s stake in VW boosted its profits fourfold in the six months from August to January, though sales were down by a quarter.
The German state of Lower Saxony, which holds a one-fifth stake in Volkswagen, has the power of veto on strategic decisions in the company, under a special German law.
It will take part in the new working group, as will labour representatives, the Porsche statement said.
The state’s conservative president Christian Wulff said in a statement: “We are ready for discussions, which must be carried out quickly.”
The companies have links going back to the Nazi era of the 1930s. Austrian Ferdinand Porsche was asked by Adolf Hitler to design a popular “folk’s car” which became the Beetle, Volkswagen’s best-known model.
Ferdinand Porsche set up his own company, in the southern city of Stuttgart, when Volkswagen was taken over by the Allies after the war and nationalised.
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First Published: Thu, May 07 2009. 10 02 AM IST