TURIN - Volkswagen AG continues to build its luxury-car portfolio.
VW's Audi AG signed a letter of intent to buy Automobili Lamborghini SpA just a week after Vickers plc stockholders agreed to sell Rolls-Royce Motor Cars to VW.
Sources say Audi offered around $100 million for Lamborghini, which built 216 Diablo cars last year.
Terms were not disclosed. The companies said they expect to wrap up details and close the sale in the next few weeks.
Lamborghini employs 310 people at its plant in Sant'Agata Bolognese, Italy, 20km south of Modena.
Indonesian businessman Hutomo 'Tommy' Suharto, the son of former Indonesian President Suharto, controls 60 percent of the company.
The remaining 40 percent is held by the Malaysian firm Micom Setdco.
After years of losses, Lamborghini reported a $4.2 million operating profit in 1997 on sales of about $48 million. But the owners have been seeking new investors to fund an expansion of the product lineup.
An Audi spokesman described the purchase as a 'long-term in-vestment.'
He said Audi would operate Lamborghini as a wholly owned foreign subsidiary.
The talks grew from Lambor-ghini's approach to Audi last year in search of V-8 engines and other parts for its planned 'Baby Dia-blo.'
The new model, code-named L140, is expected to be priced at around $100,000 when it goes on sale in 2000. Lamborghini hopes for sales of around 2,500 annually.
Volkswagen will be the seventh owner in Lamborghini's 35-year history.
Chrysler Corp. owned Lamborghini from 1988-1993.