No decision was made by Volkswagen at a supervisory board meeting on how to merge with Porsche in an effort to avoid being adversely affected by a billion-euro tax bill in the process, a high-ranking official disclosed. He told Reuters that there is a "firm commitment" on VW's part to obtain synergies as fast as possible but not at all costs.
The automaker, which owns luxury vehicle brands like Bentley and Audi, is facing a potential tax payable of around 1 billion euros or $1.35 billion if it were to purchase the rest of Porsche's automotive business before 2014. As a result, VW may postpone the purchase until 2014, the executive disclosed after the board meeting.
VW already has a 49.9 percent share of the vehicle manufacturing operations of Porsche. Last September, the automaker dismissed plans for a complete merger by the end of 2011 after legal proceedings against Porsche in Germany and the United States made the valuation of the sports vehicle manufacturer more complex.
According to the executive, the tax burden is the "key stumbling block." He also said that there is "quite a bit of homework left to be done." A banker who is familiar with the situation stated that he thinks that VW would pledge to create a special holding company to complete the transaction, allowing it to purchase the other half of Porsche's automotive business more quickly while shunning tax payments. Marco Dalan, spokesperson for Volkswagen, declined to make a comment. Porsche hasn’t commented on this report yet.