Volkswagen AG, the family-controlled car manufacturers, announced last night its board has agreed to pay €3.3 billion for a 42% stake in Porsche.
Porsche will retain its independence, according to the statement, although Martin Winterkorn, current chairman of VW's board of management, will become the new Porsche CEO. He replaces Michael Macht, who will take up a position in VW management to represent Porsche's interests.
"The Porsche and Piech family shareholders will remain the largest shareholders at Volkswagen," said VW after the meetings last night.
This is the latest step in what is set to be a complex merger of the two companies, currently headed by rival branches of the same family. Last month saw former Porsche CEO Wendelin Wiedeking resign after he fell out of favour with VW chairman and grandson of the Porsche founder, Ferdinand Piech (pictured). (Click here to read our coverage of Wiedeking's resignation)
For Porsche, the announcement yesterday is far from the deal it envisioned when the company began buying VW shares four years ago. However, Porsche built up €10 billion of debt attempting to takeover the much larger VW and subsequently fell into financial trouble. Problems at Porsche became apparent in April and a reversal of fortunes meant the company needed VW's help to survive.
Merger talks between the two companies began in May but have been fraught with difficulties and public disputes between Wolfgang Porsche, chairman of the supervisory board at Porsche, and his cousin Piech. (Click here to read our ongoing coverage of the Porsche/VW saga)
However, the two have made steady progress in the last month in order to move forward with the integration of the family businesses.
Want to get the latest family business news direct to your desktop? Click here and register to receive our weekly newsletter.