Fri, 06 July 2012
FRANKFURT -- Europe's biggest automaker Volkswagen is to wrap up its takeover of German luxury sports car group Porsche two years earlier than planned in order to unlock hitherto untapped economies of scale.
In a statement issued late on Wednesday, the two companies -- which have been seeking to merge since 2009 -- said they had found a way to integrate their two businesses "some two years earlier than would have been economically feasible" under their previous plans.
The news sent VW shares jumping more than four per cent in early trade yesterday, where they were the biggest gainers on the blue-chip DAX 30 share index.
Under the deal, which they said would unlock 320 million euros ($400 million) in net synergies, VW is to pay Porsche's current holding company Porsche SE 4.46 billion euros plus one VW share for the 50.1 per cent it does not already own in the sports car maker.
VW initially acquired 49.9 per cent in Porsche in 2009 in the first stage of a complex takeover agreement, the completion of which has since run into a number of legal and tax hurdles.
Prior to VW's takeover of Porsche, the sports car maker had itself tried, but failed, to swallow the much larger VW, running up more than 10 billion euros of debt in the process.
When VW announced its takeover plans for Porsche in 2009, its initial goal was a merger with Porsche SE, which currently holds a 50.7 per cent stake in VW and a 50.1 per cent stake in Porsche AG.
But it quickly shelved such ambitions in the face of dozens of lawsuits by hedge-fund investment managers seeking billions of dollars in damages from Porsche related to the failed takeover attempt.
© Oman Daily Observer 2012
