As potential legal and tax liabilities have increased in the last few months, VW CEO Martin Winterkorn estimates that there is a 30% chance that there won’t be a Porsche-VW merger under the leadership of VW.
This indicates that there is a probability that investors who are holding preferred shares in Porsche SE will not be able to swap their stock for equity in Volkswagen.
In an interview with Automobilwoche, a sister publication of Automotive News Europe, Winterkorn said that its lawyers are closely examining the risks.
Volkswagen has a put-call option in place that permits it to obtain the remaining 50.1% of Porsche SE's sports cars activities for a strike price of 3.9 billion euros ($5.41 billion) independent of any merger. However, there are tax risks involved in this purchase if the option is exercised before the end of 2014.
Earlier this month, Winterkorn and VW finance chief Hans Dieter Poetsch said that legal and tax issues might delay the deal further than the end of 2011, when the merger contract is set to expire.
What put Porsche in this dilemma was when it attempted a takeover of Volkswagen, which almost bankrupted it since it could no longer afford to support the elaborate structure of VW derivative positions used to build its stake. [via autonews - sub. required]