The management boards of Volkswagen AG and Porsche Automobil Holding SE have agreed to create an “integrated car manufacturing group”.
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The final structure, details of which will be worked out in the next month, will see VW and Porsche’s 10 brands integrated under the control of a parent company but operating independently.
The two groups have set up a joint working group including the State of Lower Saxony as the largest co-shareholder and employee representatives of both companies.
“Volkswagen AG welcomes the decision by representatives of the Porsche und Piëch family shareholders to create an integrated automotive group in which each of the 10 brands will retain its independence,” VW said in a statement.
Porsche, which had been seeking to take control of Volkswagen, said in a statement that the decision came after weeks of what it called “intensive talks”.
The family-owned automaker said it had “argued for the creation of the integrated car manufacturing group”.
Stuttgart-based Porsche already holds a majority stake in VW and made an ambitious takeover bid for it three and a half years ago.
Reports said last week that VW was considering a counter bid for Porsche, which denied this. Newspapers in Qatar reported the emirate’s Prime Minister Abdallah bin Khalifa Al Thani said he was bidding for a stake in Porsche, news agency AFP reported.
VW has the biggest sales of any car firm in Europe – 15 times larger than Porsche, which is EUR9bn (US$11bn) in debt.
The Porsche parent group owns just over half of VW after boosting its stake in January and had aimed to raise its stake to 75% until it was hit by the global economic slowdown.
Porsche’s stake in VW quadrupled its profits in the six months from August to January, though sales were down by a quarter.
The German state of Lower Saxony, which holds a one-fifth stake in Volkswagen, has the power of veto on strategic decisions in the company, under a special German law.
State president Christian Wulff said in a statement: “We are ready for discussions, which must be carried out quickly.”
AFP noted that the companies have links going back to the Nazi era of the 1930s: Austrian Ferdinand Porsche was asked by chancellor Adolf Hitler to design a popular “people’s car” [also known has the ‘KdF wagen’]which eventually became the famous ‘Beetle’.
Ferdinand Porsche set up his own company in Stuttgart after Volkswagen was taken over by the Allies after the war and nationalised. It initially resumed production under the control of a British army officer before being returned to German management several years after WWII.
