Saturday June 27, 02:22 PM
VW proposes merger plan with Porsche
BERLIN (AFP) - German car giant Volkswagen (Xetra: 766400 - news) has proposed a system of cross-ownership with rival Porsche (Xetra: POR3.DE - news) leading eventually to a merger between the two companies, according to the weekly Der Spiegel.
VW has given the Porsche board until Monday, June 29, to agree to the scheme drawn up by Volkswagen boss Martin Winterkorn, the authorities of the German state of Lower Saxony, which has a stake in VW, and Porsche co-owner Ferdinand Piech, according to the report to appear in full on Monday.
Porsche currently holds 51 percent of Volkswagen, where Piech is head of the supervisory board, while ownership of Porsche is concentrated in a holding divided between the Porsche and Piech families.
According to Der Spiegel, under the proposed scheme VW would take over 49.9 percent of Porsche, with the remainder staying in the hands of the Porsche holding.
Ultimately, the Porsche and Piech families would have more than 40 percent of the merged company, Lower Saxony 20 percent, the Gulf state of Qatar, which is currently in talks with Porsche, 15 percent and an unspecified other state fund five percent.
If the head of the Porsche supervisory board, Wolfgang Porsche, and chief executive Wendelin Widekind reject the plan, heavily-indebted Porsche can expect to see VW demand the reimbursement of a 700-million-euro loan it provided in March, Der Spiegel said.
Porsche accumulated some nine billion euros (12.6 billion dollars) in debt trying to increase its VW holding to 75 percent.
It asked the German government for a credit of 1.75 billion euros, but officials have declined to approve the request.
Qatar has said it is interested in a direct stake in Porsche, though another option would be for the Gulf state to buy options in Volkswagen shares held by Porsche.
According to another German weekly, Focus, Qatar said this week that a deal with Porsche depended on Porsche working things out with Volkswagen.
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