Following news yesterday of Volkswagen and Porsche likely being held under the parent company name of Auto Union, news this morning from Reuters Newsagency can confirm that following weeks of negotiations, VW has agreed to purchase a 42 per cent stake in Porsche, totalling a US$4.7 billion investment.
The move will combine the two German manufacturers, most likely under the revived Auto Union banner, and will pave the way for a fully integrated merger by the end of 2011.
Volkswagen’s current CEO, Martin Winterkorn, will act as the new head of Porsche and will likely oversee the combined company as well.
Porsche’s failed takeover of VW earlier this year set the stage for the merger. Porsche fought over the last several months to takeover VW – Europe’s largest automaker – but wound up with a mountain of debt totaling US$12 billion. After the failed takeover, Porsche fired CEO Wendelin Wiedeking.
VW will finance the merger with a preferred share offering early next year. Despite the takeover, the Porsche and Piech families will remain the largest stakeholders in the new company.
CarAdvice will keep you posted on all developments as they come to hand.