The Auto Union name could be revived as the name for the new Volkswagen-Porsche combined entity which will be led by VW CEO Martin Winterkorn.
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The two companies have broadly agreed on details for a deal to combine their businesses Reuters has learned and Winterkorn has given assurances that Porsche would remain an independent brand, just like premium carmaker Audi.
VW’s supervisory board last night said will pay about EUR3.3 bn (US$4.7bn) for a 42% stake in Porsche’s automotive unit and fully integrate the business as a tenth brand.
VW is set to buy a stake of up to 49% in Porsche AG, the sports car unit of family-owned Porsche Automobil Holding SE, the first step in creating what VW has called an ‘integrated’ automotive group by the end of 2011.
Auto Union was an amalgamation of four German car manufacturers, established in 1932 in Chemnitz during the Great Depression. The company evolved into present day Audi, as a subsidiary of Volkswagen Group.
Auto Union is best known for its racing team, Auto Union Rennabteilung (based in Zwickau) and the famous Silver Arrows.
Reuters has been told by a board member that questions over valuation have been resolved.
Porsche, which owns a stake of just above 50% in VW voting shares and swap contracts to control around 20% VW stake, was forced to abandon its stake-building earlier this year and negotiate a merger instead.
The sportscar maker ousted its chief executive, Wendelin Wiedeking, in July and is working to pay down a debt pile of more than EUR10 bn ($14.13 bn). The amount VW will pay for Porsche could be adjusted following detailed due diligence, said sources close to VW.
The combined company would generate more than EUR120 bn (US$169 bn) in pro-forma annual revenue from the sale of nearly 6.4 million vehicles, based on figures from the carmakers’ past fiscal years.
At the same time as the VW-Porsche negotiations, the Gulf state of Qatar is set to buy Porsche’s package of derivatives, which are worth about EUR5 bn (US$7 bn), a step designed to alleviate Porsche SE’s debt.
Porsche could sell some voting shares to Qatar as part of the capital increase, people familiar with the deal said. It remained unclear whether Qatar would take voting shares in Porsche, in Volkswagen, or in both.
See also: GERMANY: [UPDATED 20:00 CET] VW’s Winterkorn becomes boss of Porsche SE
