In 2007, Dr Ing. h. c. F. Porsche AG executed a 30.9 percent bid on Volkswagen shares. Effectively the largest shareholder of Volkswagen, Porsche denied its intent to take over Volkswagen and claimed it was done to prevent a competitor from bidding and dismantling the Volkswagen Group, Germany's largest automaker and also one of the most important parters of Porsche.
By late 2008, Porsche raised its stake to 50.76 percent and even projected to own as much as 75 percent of Volkswagen before the end of 2009. Unfortunately, Porsche realized it has built an immense financial burden from taxes on Volkswagen options as the debt figure started to exceed 10 billion euros.
In a strange maneuver, Qatar Investment Authority arranged a solution with the Porsche supervisory board that resulted to the decision of a reverse merger with Volkswagen.
Now, the saga draws closer to the finale as Volkswagen and Porsche board members have agreed to made arrangements that position VW Group to acquire the Stuttgart sports car maker in a month's time.
According to Financial Times, Volkswagen announced yesterday that the remainder of Porsche's operations will be completely absorbed for the price of 4.5 billion euros. With this deal complete, Volkswagen stands to gain significant ground on both General Motors and Toyota Motor Company to become the world's biggest carmaker.
Porsche will be the 12th active company in Volkswagen Group, which is also comprised of auto and motorcycle companies including Audi, Bentley, Bugatti, Lamborghini, Ducati, Seat, and Škoda.
In total, Financial Times reports that the acquisition will cost Volkswagen about 7 billion euros as the Wolfsburg automaker must also consider Porsche's 2.5 billion in liabilities. On the other hand, the addition of Porsche will give VW a company with one of the highest profit margins in the business. What's more, VW considers the deal to be quite a bargain as the company values Porsche at more than 20 billion euros.
Looking forward, VW CEO Martin Winterkorn said, "We can concentrate on what VW and Porsche can do best - building and developing great cars. I'm convinced that more than ever we have the ability to become the best car company in the world."
