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by Matt Brogan

Volkswagen has today taken a 49.9 percent stake in Porsche. The move completes the next important step on the way towards a fully integrated automotive partnership.

The price paid for the stake was €3.9 billion (AUD$6.33 billion) and is based on the enterprise value for Porsche calculated under a careful due diligence and valuation procedure.
Following the Comprehensive Agreement concluded in August, the implementation agreements signed in November and the Volkswagen Extraordinary General Meeting held last week, the stake in Porsche represents the next milestone on the way towards the integrated automotive group with Porsche under the leadership of Volkswagen. The acquisition of the trading business of Porsche Holding Salzburg is planned for 2011. The creation of the integrated automotive group is then to conclude with the merger of Volkswagen and Porsche during the course of the same year.

The combination of the two companies follows a compelling strategic, industrial and financial logic. For the Volkswagen Group, Porsche ideally complements the brand portfolio. The Stuttgart-based car maker will allow Volkswagen to further expand its position in the premium business, which offers particularly strong earnings. In turn, as an independent brand under the roof of the Volkswagen Group, Porsche will have the potential for significant additional growth.

The transaction will have a sustained positive effect on the earnings situation of the Volkswagen Group. With a return on sales of 10.3 per cent, Porsche is the world’s most profitable automobile manufacturer. Volkswagen will in future participate in this business success through its stake. In addition, the planned integration of Porsche in the Volkswagen Group and the associated closer cooperation will realise significant synergies on both the income and the cost side. As a result, the annual operating profit of the Volkswagen Group is expected to increase by some €700 million (AUD$1.13 billion) in the long term.




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