Volkswagen AG, Europe’s largest automaker will likely this year complete its takeover of sports car division Porsche after clearing key hurdles, according to a German media report overnight.
A final decision has yet to be made as the evaluation of possible alternatives and related tax payments is continuing, it reported, citing three people familiar with the matter.
“Of course, all the parties are interested in achieving the goal of an integrated automotive group as soon as it makes economic sense to do so”, Christine Ritz a VW spokeswoman, said.
VW will get around having to pay more than 1 billion euros in taxes if completing the purchase before 2014 by setting up a holding company to temporarily take control of the stake, Spiegel reported.
In addition, the German automaker (VW) would also meet Porsche’s demands for independence by signing a contract giving the sports car maker control over its investments and models, Spiegel said.
The two companies have openly admitted their frustration about having to work at arm’s length with each other even though they share the same CEO and CFO, a situation that seemingly satisfies only the law firms under contract.
In September last year, Volkswagen and Porsche announced that the decision on a full merger including Porsche’s holding firm can’t be made by the end of 2011 as initially planned, as the financial risks related to lawsuits in the U.S. and Germany were impossible to quantify.
Several international investment funds accuse Porsche of cornering the market in 2008 during its ill-fated takeover attempt of Volkswagen, which backfired when credit markets dried up and led to the departure of Porsche’s previous management.
VW already owns 49.9 percent of Porsche’s automotive unit.