Volkswagen finalises takeover of Porsche
A Volkswagen Beetle pictured in a delivery tower at the company's headquarters in Wolfsburg
Volkswagen has said it is on track to finalise the full takeover of sports car manufacturer Porsche by the end of the month.
German car firm Volkswagen said Porsche AG would become another fully-integrated brand of the group as of August 1.
The Wolfsburg-based group, Europe's biggest car maker, includes brands such as Audi, Volkswagen, Seat, Bugatti, Bentley and truck makers MAN and Scania.
The deal is also set to restructure the companies' complicated ownership ties.
Volkswagen says the missing 50.1 per cent in Porsche's capital will be bought from holding company Porsche SE for £3.5 billion plus one Volkswagen share.
Porsche SE, in turn, currently holds a sizeable stake in Volkswagen and several executives and major shareholders are active in both firms.
"VW is getting a good deal," said London-based Morgan Stanley analyst Stuart Pearson, predicting in a note to investors that its completion would lift Volkswagen earnings by 6 per cent next year.
"Porsche is the world's best premium car story," he said.
With sales volumes running close to 20 per cent above their previous record, Porsche's main challenge is "securing sufficient production capacity", and integration with Volkswagen may help, Pearson added.
Volkswagen already plans to begin assembling some Porsche models in its own plants.
Europe's largest carmaker has been pushing for rapid integration of Porsche's automotive businesses to generate annual cost savings of 700 million euros and erase about 2 billion euros of debt at the sports car maker's holding company.
Porsche and Volkswagen agreed a merger in August 2009 after the maker of the iconic 911 sports coupe racked up more than 10 billion euros of debt attempting to buy Volkswagen, pitting the Porsche family against the rival Piech dynasty.
Volkswagen had abandoned the earlier merger plan last September, citing unquantifiable legal risks from lawsuits filed by short-sellers in the United States and Germany who accuse Porsche of secretly piling up Volkswagen shares during its failed takeover attempt, causing investors to lose billions of dollars.
Full consolidation of Porsche's auto-making operations will boost Volkswagen's full-year financial result by more than 9 billion euros and shrink its net liquidity by about 7 billion euros, the company has said.
Both companies had for months been exploring ways to avoid taxes of as much as 1.5 billion euros that would have been incurred if Volkswagen were to seal the purchase before August 2014.
Submitting a single common Volkswagen share to Porsche SE may classify the deal as a restructuring under Germany's so-called reorganisation tax law, enabling Volkswagen to complete the transaction ahead of schedule without incurring a huge tax bill.
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