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Turmoil at Porsche as merger draws closer

The future of the family-controlled luxury carmaker Porsche is to be decided on Thursday at an extraordinary meeting of the company's shareholders.
 
The meeting is expected to finalise Porsche's union with Volkswagen, whose chairman, Ferdinand Piech (pictured), is grandson of founder Ferdinand Porsche. However, the announcement has done little to stop the rumours and speculation surrounding the merger and the Porsche family.
 
Media reports yesterday speculated Porsche's non-family chief executive Wendelin Wiedeking would resign at the meeting and in doing so would receive a payoff of €100 million. If the reports prove accurate, this payment will be the biggest of its kind given to an industry head in Europe.
 
Wiedeking began as chief executive in 1993 when Porsche was on the brink of bankruptcy and is credited with turning the company's fortunes around. However, Wiedeking's attempt to takeover VW, in which Porsche now owns a 51% stake, and the onset of the global financial crisis, pushed Porsche into €10 million of debt.
 
The takeover move did not sit well with Piech and according to a former Porsche executive Piech and Wiedeking became involved in "open warfare." Wiedeking in now expected to step down as the companies move forward with their merger, not the takeover bid once envisaged by Wiedeking.
 
The problems between Piech and Wiedeking are not the only public disputes surrounding the merger; recent weeks have seen Wolfgang Porsche, chairman of the Porsche supervisory board, issue strong words to his cousin Piech after previous merger talks broke down.
 
Problems at Porsche first became apparent in April when Wolfgang Porsche admitted the financial situation at the company was serious. Takeover aspirations were cast aside and saving the company from failing became top priority. In May the Porsche and Piech families agreed to merge Porsche and VW, although the agreement has not yet been finalised due to several disagreements between the families.
 
Thursday may finally herald the merger, but the families will hope this also signals the end of internal feuding.

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