Porsche SE, Volkswagen complete their awaited merge

Article by Christian Andrei, on August 2, 2012

Porsche SE and Volkswagen completed their eagerly awaited merge on Wednesday. Many analysts have come out to say that the tie-up of the two companies will pose a huge potential. Last Tuesday, Porsche SE reported a profit of 1.15 billion euros ($1.41 billion) in the first six months of the year compared to 149 million euros the previous year.

The automaker said that net income is predicted to be in the "high" single-digit billions of euros this year, which include one-time gains from merging with VW. Porsche SE, a holding company that owns half of the stock of Porsche AG, is the biggest VW shareholder, with 50.7% of VW's common stock. VW is already the owner of half of the sports carmaking business of Porsche. The remaining half was scheduled to be bought on Wednesday.

It was in August 2009 that the two companies had first entered an agreement for a full merger. At that time, Porsche had incurred over 10 billion euros of debt in a botched attempt to take over VW, resulting to disputes between the Porsche and Piech families. VW purchased 49.9% of Porsche's sports car operations in December 2009 for 3.9 billion euros. It had aimed to acquire what’s left via a share-swap with the holding company.

But last year, the automakers withdrew the merger plan due to U.S. and German investor lawsuits that blamed Porsche for secretly gathering VW shares. As a result, billions were lost by short-sellers. Last July 4, an agreement was made by VW and Porsche to permit VW to purchase the remaining half of Porsche for 4.46 billion euros and evade a tax bill of as high as 1.5 billion euros by moving a single VW share to Porsche.

These two companies have already partnered in numerous areas in their operations. VW and Audi, its luxury division, builds the bodies for the Cayenne SUV and Panamera coupe. These are the two top-selling models of Porsche. The Macan compact SUV, the next model from Porsche, will be jointly developed by the two companies. The Macan will arrive at showrooms in 2014.

Topics: porsche, vw

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