Official: VW to buy 42% stake in Porsche, Merger Agreement Finalized

VW has announced that Volkswagen and Porsche has reached an agreement that VW will buy a shareholding of 42% in Porsche AG for about €3.3 billion by the end of 2009. Then the two German automakers will get a merger and the Auto Union name could be revived to brand it. "A new era" for both companies begins. Volkswagen’s current CEO, Martin Winterkorn, will act as the new head of Porsche and will likely oversee the combined company.

Earlier this year, Porsche had hoped to take over the VW Group by buying up its voting shares, but due to a mountain of debt totaling $12 billion, the takeover failed and Porsche fired CEO Wendelin Wiedekin. Ultimately VW Group took the purchase of Porsche stock.

However, it’s not Volkswagen running the whole show. According to a statement released by the VW Group, "The integrated automotive group will be formed from the progressive participation of Volkswagen in Porsche AG and the subsequent merger of Porsche Automobil Holding SE and Volkswagen AG. Porsche will remain an independent company headquartered in Stuttgart."

VW board chairman Martin Winterkorn described the company's plans in July, saying, "Volkswagen and Porsche have excellent know-how at their disposal and can use their resources even more efficiently by combining them. For this reason, we expect additional growth opportunities, safeguarding existing jobs and creating new ones.

"At the same time, we can call on our considerable experience in the integration of proud and successful brands rich in tradition. Like Audi today, Porsche can also continue its independent development under the aegis of Volkswagen and preserve its own identity. We have great respect for the achievements of the Porsche workforce and are convinced that Porsche can enrich the Volkswagen Group – just as Volkswagen can vice versa enrich Porsche.”

Of course, we customers concern more about the changes of the lineup. The combined company will have 10 brands, adding the Porsche marque to a stable that already includes Audi, Bentley, Bugatti, Skoda, Seat and Lamborghini.