Tuesday, May 19, 2009

VW-Porsche Merger Talks On Hold

vw_porschebeetle_neinFirst Porsche wanted to acquire a 75 percent stake in Volkswagen, then, after increased opposition frustrated its plans, it scrapped that idea and instead pursued a merger between the two companies.

Now that scheme is in the bin too, with Volkswagen stating that Porsche is not ready to merge with the automaking giant.

Under the proposed merger, Porsche and Volkswagen would have been managed by a single board, likely made up of existing VW Group executives and based at VW’s headquarters in Wolfsburg, Germany.

In a post-merger sencario, Porsche would have benefited from access to VW’s extensive engine lineup and the greater financial security offered by the bigger, more prolific car company, but what Porsche would have to offer VW isn’t immediately obvious.

“We recognised at the end of the week that Porsche is lacking several fundamental conditions for the discussions,” a VW spokesman was quoted as saying.

The debt-heavy sports car manufacturer is apparently struggling to get support for the merger, with some of its financial woes stemming from the loans it took out to purchase a bigger stake in VW. Volkswagen was initially supportive of the merger idea, but is now requesting that negotiations be paused until Porsche can give a clearer plan idea of how it intends to get its financials under control should the merger be greenlit.