VW to acquire 49.9 percent of Porsche by year's end

AFP - [email protected] • 20 Oct, 2009 Updated Tue 20 Oct 2009 19:03 CEST
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Volkswagen, the biggest European automaker, said on Tuesday it would buy 49.9 percent of the luxury sports car maker Porsche by the end of this year for around €3.9 billion ($5.8 billion).

Until now, a VW statement said, VW had sought to acquire 42 percent of Porsche in the first step of a full merger of the two companies. The increase stake purchase "reflects the positive development of ... discussions between Volkswagen and Porsche," it added.

The two companies have made good progress on "synergies in several areas," a VW spokesman told AFP without elaborating.

VW planned to finance the operation with a capital increase of around €10 billion by 2014, with the first tranche launched in the first half of 2010.

"At least €4 billion" would be used to buy Porsche, which will become VW's 10th brand, the spokesman said.

In August, VW ended months of tension with Porsche by announcing it would take Porsche over in stages during a complex transaction expected to last several years. The overall calendar has not changed and the final merger of the two groups is still expected to occur in 2011, the VW statement said.

VW wants to raise cash to finance the Porsche purchase, underpin its rating by international agencies and retain "financial flexibility," the spokesman added. The capital increase must be approved by VW shareholders at an extraordinary general assembly on December 3.

The total amount being targeted has raised speculation over a possible VW move on the conglomerate MAN, which makes heavy trucks and in which VW is already the dominant shareholder with a stake of around 30 percent.

VW supervisory board president Ferdinand Piech said last month he would like to see 12 brands within the VW group, and the company is also believed to be interested in a tie-up with the Japanese car maker Suzuki.

VW shares closed with a loss of 2.38 percent at €118.51, while Frankfurt's DAX index ended the day 0.70 percent lower at 5,811.77 points.



AFP 2009/10/20 19:03

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