Volkswagen AG, known as Europe’s largest carmaker, plans to buy the remaining 50.1% stake in Porsche SE’s automotive business. The deal may be closed only after the approval of German tax authorities.
The companies also tried to close a deal in 2009, but lawsuits against Porsche in the U.S. and Germany complicated the company’s valuation. Now VW’s main alternative to the original merger agreement is to acquire the remaining stake in Porsche’s automaking business offering 5.2 billion, leaving Porsche as the holding company for the 50.7 percent of Volkswagen’s common stock that it owns.
“For VW, this would be a good deal,” said Arndt Ellinghorst, a London-based Credit Suisse analyst. “Integrating the operating business would help them work closer together. For Porsche shareholders, they still have the legal risk.”
If VW tries to exercise the options until November 15th, 2012, it will have to pay a tax bill of about 1 billion euros. On the other hand, the taxes would shrink to zero if the company waits until the second half of 2014. VW, who makes more cars in a week than Porsche in a year, said that the merge with Porsche will boost profitability and save 700 million euros.