Porsche SE supervisory board Chairman Wolfgang Porsche balked at an ultimatum from Volkswagen AG and the state of Lower Saxony to agree on a blueprint for the merger of the two carmakers.

A June 29 deadline to agree the corporate marriage that was first reported today in German newspapers is “blackmail” and “damaging” to the companies, Porsche, who is also a major shareholder in the eponymous sports-car maker, said in a statement. “We won’t let ourselves be blackmailed.”

Details of an alleged merger plan reported in Focus and Der Spiegel magazines reveal Porsche being forced to sell 49 percent of its shares to VW as a first step to a merger. In a second step, Qatar’s sovereign wealth fund would buy VW shares held by Porsche ahead of a full merger of the two carmakers.

Wolfgang Porsche’s confirmation of the ultimatum suggests VW and Qatar are losing patience with the indebted sports-car maker. The shareholder, while struggling to retain influence at VW after failing to win control of the Wolfsburg-based company, may be further sidelined as Qatar and the maker of the Golf car carve out a new shareholder structure.

Volkswagen is “annoyed and tired of the power struggle within the company,” Arndt Ellinghorst, a London-based automotive analyst at Credit Suisse Group AG, said in a telephone interview today. “Volkswagen wants integration, but on its terms.”

Direct Talks

While Porsche has been accumulating stock in VW since 2005 to protect ties in the company, it has become indebted after speculative investments and has taken up talks with Qatar to seek help in plugging a 9 billion euro ($12.6 billion) gap in its finances.


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