Porsche Automobil Holding SE (Porsche SE) and Volkswagen AG are expected to achieve their shared goal of creating the Integrated Automotive Group on 1 August 2012.

The board of both companies have approved a concept for the complete integration of Porsche AG into the Volkswagen Group. According to the concept, Porsche SE will contribute its holding business operations, including its 50.1 percent investment in Porsche’s operating business, to Volkswagen AG.
The consummation of the transaction will make Volkswagen AG sole owner of Porsche’s business operations.

According to the official documents, Porsche SE will receive a cash amount of about 4.46 billion euro from the transaction, as well as one new ordinary Volkswagen AG share. This cash amount includes the base purchase price agreed upon in the basic agreement and discounted to today’s fair value for Porsche SE’s 50.1 percent share in Porsche’s operating business as well as the fair value of dividend payments from this investment due to Porsche SE from now until 2014.

The cash amount of about 4.46 billion euro additionally includes, also at today’s fair value, half of the possible additional net synergies made possible by the accelerated creation of the Integrated Automotive Group totaling some 320 million euro, as well as the fair value of the other Porsche SE assets that will be contributed to Volkswagen AG.

The accelerated creation of the Integrated Automotive Group can be implemented at economically viable conditions on the basis of the German Transformation Tax Act and the German Transformation Tax Decree published at the end of 2011, as well as binding rulings from the competent financial authorities.

Porsche SE will initially use the cash of about 4.46 billion euro that it receives to repay bank liabilities of 2.0 billion euro in full. The major portion of the liquidity remaining thereafter is intended to be used for strategic equity investments, focusing along the automotive value chain.

VW acquired 49.9 percent of the Stuttgart-based car maker in December 2009 after a botched attempt by Porsche to take control of its much bigger competitor. Both companies have for months been exploring ways to fold the remainder of Porsche into VW’s multi-brand structure.

Porsche and VW agreed a merger in August 2009 after the maker of the iconic 911 sports car racked up more than 10 billion euros of debt attempting to buy VW.


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