Europe’s biggest automaker Volkswagen says it is on track to finalise the full takeover of sports car manufacturer Porsche by the end of the month.
“The unique Porsche brand will now become an integral part of the Volkswagen Group–that is good for Volkswagen, good for Porsche and good for Germany as an industrial location,” Volkswagen Chief Executive Martin Winterkorn said in a statement.
The final agreement to add Porsche to Volkswagen’s stable of 10 car and truck brands draws a line under one of the most spectacular takeover bids in the European car industry in recent years, which eventually backfired badly.
Under the plan, Volkswagen will pay Porsche Automobil Holding SE—the holding company that owns the majority of storied German sports-car maker Porsche AG—€4.46 billion ($5.59 billion) in cash, plus one ordinary share in Volkswagen, in exchange for the remaining 50.1% of the sports-car operations.
Volkswagen is paying the purchase price, plus transferring one share to Porsche, in a move that allows the carmaker to classify the merger as a restructuring rather than a takeover.
Doing so means VW avoids a tax bill on the purchase of about 1 billion euros. However the purchase will cost more than 100 million euros ($125.10 million) in taxes, Chief Finance Officer Hans Dieter Poetsch said at a press conference on Thursday.
On Thursday before the official market open in Frankfurt, VW shares were indicated up 2.3 percent according to brokerage Lang & Schwarz, while Porsche SE shares were seen 7.8 percent higher.
Porsche and VW agreed a merger in August 2009 after the maker of the iconic 911 sports coupe racked up more than €10bn of debt attempting to buy VW, pitting the Porsche family against the rival Piech dynasty.