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Porsche & Volkswagen merger update

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.

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