Porsche, VW may not ink merger plan this week image

Porsche SE may not make a decision this week on a plan to merge with Volkswagen AG as the sports- car maker’s controlling families can’t agree on measures to reduce debt, three people familiar with the situation said.

Porsche’s supervisory board may delay a decision on a proposed stake sale to Volkswagen until July 29 at the earliest, said the people, who asked not to be identified because the negotiations are private. A board meeting scheduled for July 23 may yield no decision among the members of the Porsche and Piech families, the people said.

Volkswagen, whose supervisory board also meets July 23, plans to discuss a proposal to take over Porsche’s operating unit in two steps valuing the company at 8 billion euros ($11.4 billion) as part of a transaction that would involve an investment by Qatar, people familiar with the talks have said. The negotiations are hindered by a possible tax charge if VW completely takes over Porsche AG, one of the people said.

“This drama doesn’t seem to end,” said Stefan Bratzel, head of the Center of Automotive Research Institute in Bergisch Gladbach, Germany. “Neither Porsche nor Volkswagen can afford any further distraction.”

Spokesmen at Volkswagen and Porsche declined to comment when reached by Bloomberg News.

Porsche is struggling to reduce debt after amassing a 51 percent stake in VW as well as options that can be converted into a further 20 percent holding in Europe’s largest carmaker. Net debt has jumped to about 10 billion euros from 9 billion euros reported as of Jan. 31, one of the people said.

‘In a Few Days’

Wendelin Wiedeking, chief executive officer of the sports-car maker, said in a July 17 interview that the companies were likely to reach an agreement on a sale in a few days. Lower Saxony Prime Minister Christian Wulff said on the same day that the tussle between the carmakers appeared to be over. The state is home to VW and is the carmaker’s second- biggest shareholder, with a 20 percent stake and the power to veto decisions.