The merger of Volkswagen and Porsche took off formally with the contract agreement getting signed. This will make VW to acquire the 911 sports model to its portfolio along with formal elements such as structural and legal aspects to be bound by the two companies. The pact enables VW to go along with owning Porsche’s automaking division. According to a rough estimate,the German car maker would shell out 3.9 billion euros ($5.8 billion) to stake 49.9% claim in the Porsche unit.
This will materialize by the end of 2011 as a first step of merger. The supervisory board of Porsche, consisting members of Porsche and Piech families (which is in control of Stuttgart, Germany-based company) will sit in Wolfsberg to approve the contracts. By this approval, VW will get the CEO Martin Winterkorn to manage Porsche’s company and Chief Financial Officer Hans Dieter Poetsch to get a berth in the management board.
VW is aiming to reach the top slot of number 1 in the auto building, said Head, Center of Automotive Research Institute in Germany. The proposed merger will boost such efforts. VW has been thrust with the target of surpassing Toyota Motor Corp in terms of deliveries and net profit before 2018. With Porsche becoming the 10th brand for VW, (quite popular with Audi in Germany and Lamborghini in Italy and Crewe in England) VW is all set to
regain its supremacy.
It can be remembered that the agreement between these car makers took off in this August, putting an end to 4-year feud over control. Another impact of this agreement is an investment from Qatar with 10% voting rights in Porsche to gain 17% of the merged car maker. Porsche was in dare need for this agreement to get relieved from a debt of 10 billion euros in a stretch of six months, as a result of its neglect to combine with VW. However, Porsche has a bigger hand in VW with 53% in common stock.
The formal merger of Volkswagen AG and Porsche AE is to induce the multi-stage process and the next gear will take Porsche to a stake of 49.9 % in VW. VW in its part has called for an approval from its shareholders for a meet on December 3 on the proposed purchase of Porsche.