BERLIN -- Volkswagen Group is in advanced discussions with Porsche Automobil Holding SE, the group's largest shareholder, about a potential IPO of the sports car brand and the two have negotiated a framework agreement as the basis for preparing such a step, VW said in a statement.
The conclusion of an agreement must be approved by the management board and supervisory board, VW said, adding a final decision had not yet been taken.
"Whether a Framework Agreement is concluded ... is currently open and depends on the approval of both parties' boards," the automaker said.
Porsche SE confirmed in a separate statement it was in discussion with VW about an IPO, a transaction which could include the acquisition of ordinary shares -- which bestow voting rights upon the holder -- of Porsche AG.
VW shares gained as much as 10 percent to 192.48 euros after losing 3.9 percent in early trading.
Speculation about a Porsche listing, which could be a record-breaking IPO, has lifted hopes on the stock market several times over the past year, but no decision has been made due to a complex stakeholder set-up.
Sources told Reuters last year the Porsche and Piech families, who control Porsche SE, were weighing taking a direct stake in Porsche AG.
The listed Porsche SE is separate from the sports car business. It was created more than a decade ago when Porsche tried to take over control of a much-larger VW Group.
The ill-fated attempt imploded when funding dried up during the financial crisis and the sports car business was folded into VW Group and Porsche SE remained a separate legal entity.
Bloomberg Intelligence estimates Porsche could be valued at between 60 billion and 85 billion euros ($68 billion and $96 billion). That compares with a current market value of around 112 billion euros for the entire group.
Apart from the main VW car brand and Porsche, the German manufacturer also owns nameplates like Audi, Lamborghini and Bentley.