VW buys for over €4 billion the remaining 50% stake in Porsche

Volkswagen is set to complete the acquisition, for €4.46 billion, of a 50.1% stake in Porsche. It will become the sole shareholder of the sports car manufacturer, after seven years of disputes that have created frictions between two of the most powerful families in the German business, writes Bloomberg. VW managed to reach an agreement with tax authorities, exceeding the last obstacle to takeover Porsche, the auto giant announced. The transaction will be finalized by a cash payment, starting from the €3.88 billion market value of the sports car manufacturer, plus compensation on account of dividends that Porsche holding would have been entitled and an amount representing half the expected synergies from the merger.

Porsche will be integrated in the Volkswagen brands portfolio, which include other carmakers such as Audi, Skoda and Seat, and also the motorcycle manufacturer Ducati and truck manufacturers MAN and Scania. The two companies agreed to merge in 2009, when Porsche was in a difficult situation, amassing debts of more than €10 billion after a failed attempt to take over Volkswagen. Porsche holding company, controlled by Piech-Porsche family, still owns 50.7% of common shares of Volkswagen. Volkswagen shares rose by 11% this year, as the company’s market capitalization is over €57 billion.

Porsche has a market value of €12.8 billion, up by 1.5% in 2012. The attempted takeover of VW by Porsche began in 2005, dividing the two families. Ferdinand Piech, VW’s board chairman, opposed the intentions of his cousin, Wolfgang Porsche, and managed to prevent the transaction until the takeover attempt failed during the global financial crisis, when the sports car manufacturer debt exploded. Piech, Volkswagen’s former CEO, elected in April for the third term as president of the board, has crystallized in recent years his control over the group.

Volkswagen is the largest carmaker in Europe and has planned to take over in the coming years, the global car manufacturers leadership in a fight with General Motors (U.S.) and Toyota (Japan).