VW completes purchase of Porsche car business
Deal adds 12th nameplate to automaker's portfolio
BERLIN (Bloomberg) -- Volkswagen Group finalized the purchase of the Porsche auto business, ending a seven-year saga that saw VW turn the tables on the maker of the 911 sports car.
VW paid Porsche Automobil Holding SE 4.49 billion euros ($5.52 billion) and one common share for a 50.1 percent stake in Porsche AG, assuming full ownership of the brand, the Wolfsburg-based company said Wednesday in a statement.
"The path is now finally clear for a bright future together," Martin Winterkorn, CEO of Volkswagen and Porsche SE, said in the statement. "Even closer cooperation will enable us to significantly strengthen Volkswagen and Porsche, and further expand the group's product portfolio with fascinating new vehicles."
The transaction adds a 12th nameplate to Volkswagen's portfolio, which stretches from exotic Ducati motorcycles to the VW Up minicar to 40-ton trucks.
Winterkorn is looking to Porsche's profitable car business to shore up his efforts to overtake General Motors Co. and Toyota Motor Corp. to become the world's biggest automaker by 2018.
Porsche SE remains a holding company for a 50.7 percent stake in VW's common stock. After repaying 2 billion euros in bank debt, it plans to use proceeds from the transaction to make investments "along the automotive value chain," including energy trading and real estate.
The two companies agreed to combine in 2009 after Stuttgart-based Porsche racked up more than 10 billion euros of debt in an unsuccessful attempt to take over VW.
Porsche started accumulating VW shares in 2005. A merger between the two companies was scrapped last year because of lawsuits seeking more than 4 billion euros in damages.
By including the VW common share in the transaction, VW was able to avoid an additional tax bill of more than 900 million euros by allowing it to classify the deal as a restructuring rather a takeover.
The Porsche auto business increased first-half operating profit 21 percent to 1.26 billion euros, shrugging off a declining European market after a new version of the 911 model helped propel a 23 percent increase in deliveries.
The sports-car maker posted a profit margin of 18.7 percent of sales, beating the 11.6 percent margin at BMW, the luxury-car leader.
VW has said that Porsche's profit contribution will be largely consumed by charges this year.
Backed by VW, Porsche plans to expand to seven model lines from five and is considering a new sports-car line above the 911. The goal is to increase sales to 200,000 vehicles by 2018, a 71 percent gain from last year.Contact Automotive News