Volkswagen AG will acquire the 50.1% stake in Porsche SE's carmaking operations that it doesn't already own for EUR4.46 billion ($5.6 billion). The amount is based on an equity value of EUR3.88 billion and includes what the Porsche holding company would have received in dividend payments as well as half of the forecast synergies from the combination.
VW and Porsche agreed to merge in 2009 after the latter incurred over EUR10 billion in debts following a botched attempt to take over the former. The acquisition deal will allow VW to fully take Porsche car-making business into its brand line-up, which already includes Audi and Ducati.
VW said it was able to proceed with the transaction after settling a deal with German tax authorities. VW chief executive Martin Winterkorn said that the company’s full acquisition of Porsche car-making business will now allow them to cooperate even more closely and to jointly leverage new growth opportunities in the high-margin premium segment.
Winterkorn added that combining the carmakers’ operating business will make Volkswagen and Porsche “even stronger” both financially and strategically. VW expects Porsche's automaking business to be fully consolidated in its accounts starting Aug. 1, 2012.
According to VW, Porsche's earnings contribution for 2012 will be mainly offset by the purchase price. Revaluing its existing shares in Porsche would allow VW to record a non-cash gain of over EUR9 billion as well as a liquidity drain on its own auto-making unit of around EUR7 billion.
VW and Porsche had planned for a full merger in 2011 with Porsche holding company, but called it off due to lawsuits against Porsche in the U.S. and Germany over the failed VW takeover. Porsche holding company still owns 50.7% of VW's common stock.