After months of analysis and speculation, shares of family-controlled carmaker Porsche will be integrated into the Volkswagen Group, in a move that will boost VW’s results by almost €10 billion.
In a statement issued on 4 July, Germany company VW said it will pay the Porsche holding company €4.46 billion and one ordinary share of VW in return for the 50.1% stake in Porsche it doesn’t already own.
Following the integration – to be completed by 1 August – VW will own 100% of Porsche.
“The unique Porsche brand will now become an integral part of the Volkswagen Group. That is good for Volkswagen, good for Porsche and good for Germany as an industrial location,” said non-family Martin Winterkorn, chairman of the board of VW, in the release.
The merger of the two groups – controlled by the Porsche and Piech families, who are related – was scheduled to be completed by the end of 2011. But it was called off in September last year due to legal and tax issues.
By giving Porsche’s holding company a single common share of VW, the automaker will avoid paying a hefty tax bill of about €1 billion, thanks to Germany’s reorganisation tax laws.
Once the deal is completed, VW – headed by family member Ferdinand Piech, who is a grandson of the founder of Porsche – will see its full-year financial result rise by more than €9 billion, while its cash pile will fall by around €7 billion.
Porsche, headed by Wolfgang Porsche, first tried to take over VW in 2008 but its attempt failed, leading to the group accumulating debts of about €10 billion.