Porsche Volkswagen Merger

Porsche Volkswagen Merger

In late July Porsche announced Wendelin Wiedeking would be leaving his position as the company's CEO to be replaced by Michael Macht, clearing the way for the supervisory board at Volkswagen to lay the foundation for an integrated company with Porsche under VW leadership. Yesterday reports broke that the Auto Union name could be revived to brand it and that Porsche's American arm would operate autonomously, and today VW has announced it will finalize the merger with Porsche by purchasing 42% of Porsche's shares by then end of 2009.

The purchase will tie the two companies very closely together, though in a somewhat reversed role from Porsche's initial conception of the arrangement. Porsche had hoped to take over the VW Group by buying up its voting shares, but due to German state laws and its own debt, it was ultimately forced to turn to VW itself for help, leading to the VW Group's purchase of Porsche stock. Qatar, which has recently sought a share of Porsche and VW both, has also been welcomed into the deal as well as a key shareholder.

According to a statement released by the VW Group on the announcement of the acquisition, "The integrated automotive group will be formed from the progressive participation of Volkswagen in Porsche AG and the subsequent merger of Porsche Automobil Holding SE and Volkswagen AG. Porsche will remain an independent company headquartered in Stuttgart."

While VW re-affirms Porsche's independence, the Auto Union name is also being considered to help preserve the idea that it's not Volkswagen running the whole show.

The Auto Union name was originally given to a merger of four German carmakers - Horch, Audi, DKW and Wanderer - in 1932. The brand went on to fame in motorsports through the 1930s, but was disrupted by World War II, and subsequently went through a number of reformations, eventually ending in a renaming to Audi AG in 1985.

VW board chairman Martin Winterkorn described the company's plans in July, saying, "Volkswagen and Porsche have excellent know-how at their disposal and can use their resources even more efficiently by combining them. For this reason, we expect additional growth opportunities, safeguarding existing jobs and creating new ones.

"At the same time, we can call on our considerable experience in the integration of proud and successful brands rich in tradition. Like Audi today, Porsche can also continue its independent development under the aegis of Volkswagen and preserve its own identity. We have great respect for the achievements of the Porsche workforce and are convinced that Porsche can enrich the Volkswagen Group – just as Volkswagen can vice versa enrich Porsche.”

With today's announcement of VW's plans to buy into Porsche, the merger of the two companies is all but complete, but in other respects, it is only just beginning. Now the work to fit Porsche and its products together with the other 9 brands under the VW Group - or Auto Union - umbrella without conflicting with others, like Audi and Lamborghini, begins. How that is to be handled is an issue of great concern for Porsche enthusiasts, as it could dramatically re-shape the Porsche lineup.
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