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Porsche & Volkswagen merger update

By Alborz Fallah |

It was only about 12 months ago that Porsche was being praised for the brilliant business tactics in its take over Europe’s largest manufacturer, Volkswagen.

Now it seems the tables have turned and Volkswagen reported today that it has loaned 700 million euro (A$1.3 billion) to Porsche.

It is an interesting and somewhat bizarre move between the two Germany giants in the midst of their negotiations for a merger.

Additionally Porsche is nine billion euro in debt as of the end of January and as a result had to abandon its initial move to take over Volkswagen.

Reports from Germany today suggest the two companies will take longer than expected to reach a merger agreement.

The original plan was to have a deal signed four weeks after initial negotiations began on May 6, but that now seems unlikely. Porsche already owns almost 51 per cent of Volkswagen AG.

Both companies have said they are looking at creating an “integrated company.”

Financial troubles for the German sportcar manufacturer have become a public affair, in March Porsche tried to find 12.5 billion euros (A$22 billion) in loans to restructure its debt, but only managed to raise around 10 billion euro.

Since then an additional 750 million euros has been raised and the company is actively seeking an additional 1.75 billion euros.

Porsche is said to not be dependent on external financing until March 2010.


 
  • Shak

    well this isnt that big. All it is is that porsche has to wait abit longer to completely buy out its parent

  • Shak

    btw LONG LIVE THE FATHERLAND

  • http://carz.com/ Carz

    yeah, this is not big deal indeed. But if this do happen, i hope these 2 companies will be able to produce a car with volkswagen look but with porsche features and performance.

  • Maneesh

    Excellent business tactics allright!

    I recently saw a 30 min program on BBC World called “Fast Bucks”. An expert on the program said, “last year Porsche made $8 billion from share trading and derivatives, and made $1 billion from selling cars. So is Porsche a car maker or a hedge fund?”

    HA HA HA!

  • Neo Utopia

    Sorry slightly off-topic,

    Does money still have the same meaning and value to youngish people post late October ’08? It certainly has changed my perception of money and how it is a no brainer for renewable power generation and sustainable consumption together with sustainable investment.

  • f1worldchamp

    Carz, I’d rather a Porsche design with a Volkswagen price tag.

  • http://carz.com/ Carz

    Hello F1worldchamp, I understand what you mean. But for me, I want the look of Volkswagen with Porsche performance because I haven’t seen any car with Volkswagen look and Porsche speed and power before. And if it does have the price tag of Volkswagen, it’s so much the better. That is if they do complete the merger.

    But in general, I do still prefer the Porsche design specifically Cayenne.