Volkswagen AG will pay 3.3 billion euros ($4.55 billion) to acquire Europe's largest independent auto dealer group, Porsche Holding Salzburg, in a deal that VW says will help it achieve its goal of becoming the top global automaker.
The retail group has long been a cash cow for the Porsche and Piech clan but a near-collapse of Porsche SE, the holding group for the dealer chain and the Porsche sports car company, forced the families to agree a sale to VW to reduce a 10-billion euro debt amassed in Porsche's attempt to acquire full control over Volkswagen.
The Salzburg, Austria,-based dealer group was founded in 1947 by Louise Piech, daughter of automotive pioneer Ferdinand Porsche, and her brother Ferry Porsche.
It had unit sales of 421,000 new vehicles and revenue of 12.2 billion euros in the 2009/10 financial year to March 31.
VW CEO Martin Winterkorn said the dealer group will raise VW's performance in automobile trading, "thereby making an appreciable contribution to achieving the targets of the Volkswagen Group's Strategy 2018.”
Strategy 2018 calls for VW to become the No.1 global automaker in sales and profitability.
Porsche Holding Salzburg sells more than a dozen brands in 18 countries, mostly in Europe but also in China. Most of its dealers sell Volkswagen brands but in France, where it bought out the country's two biggest dealer groups, it has Renault, PSA, Ford, Opel, Mercedes-Benz and BMW dealers.
Winterkorn said the dealer group will retain its status as a single organizational unit.
The deal is expected to close in the first half of 2011 but no later than September 30, 2011, VW said.
VW had said last December that Porsche Holding Salzburg had an operating margin of 3.7 percent in fiscal 2008/09 after generating consolidated sales of 10.8 billion euros and an operating profit of roughly 400 million euros.
"Porsche Holding Salzburg is a highly profitable and efficient automobile trade company and sets the benchmark for our industry in key areas of the automobile trade such as customer orientation," Winterkorn added in a statement.