The Supervisory Boards of Porsche SE and Volkswagen AG announced on Friday they have taken a further step towards integration when both boards approved the contracts of a merger deal that would see the two companies combined by 2011.
VW was the first to announce that its board had agreed to the terms of the merger and its statement was soon followed by a similar one from Porsche. The next step in the process will see VW take a 49.9% stake in Porsche before the end of 2009 in a deal worth €3.9 billion.
Merger talks between the two companies, which are headed by rival branches of the same family, began in May but have been dogged by setbacks due to family disagreements. (Click here to read our ongoing coverage of the merger saga) However, since August the negotiations have been moving steadily towards creating one integrated company.
Ferdinand Piech (pictured), VW chairman and grandson of the Porsche founder, has attracted some criticism from VW shareholders for going ahead with the takeover. Norway's oil fund, which owns $460 million in VW shares, accused Piech of pushing through the deal that is in the family's rather than the company's interest. (Click here to read our coverage of the story)
Porsche fell into financial trouble earlier in the year after it amassed nearly €10 billion in debt building up a 51% share in VW. This was a takeover bid that eventually failed and in a dramatic change of fortunes left Porsche needing the help of VW in order to survive.
The family will remain the largest shareholder in the merged company, which could overtake family-controlled Toyota as the world's leading carmaker before 2020.
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