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VW Porsche merger

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VW Porsche merger has been finalized when VW to buy 42% of Porsche shares at the end of 2009 and merger agreement settled between both cars manufacturers. The decision of merger is after a series of intense meeting between Ferdinand Piëch and Wolfgang Porsche who are the patriarchs from Piëch and Porsche families. Both these families are majority-owned Porsche SE. It seems to be a smart move for Porsche to go for the acquisition with VW (abbreviation of Volkswagen) even though that was not its initial plan.

After few years of battle, the merger made sense for Porsche. VW Group is the biggest car maker among all German car makers with its annual sales that more than US$151 billion, which is 16 times bigger than Porsche. The annual sales for Porsche are roughly US$9.3 billion. VW has been famous in building the iconic Volkswagen Bettle since 1938 and lately even becoming more famous after building the Bugatti Veyron that used to be world’s fastest car and world’s most expensive sports cars in year 2005. Furthermore, VW is also Porsche’s most important parts supplier. Isn’t this may be a good move for Porsche?

Initially Porsche had hoped to buy up VW Group’s voting shares and planned to take over it, but Porsche had finally forced to sell 42% stock for 3.3 billion Euros (US$4.7 billion, £2.8 billion) to VW Group due to German state laws and its own debt.

According to a statement released by the VW Group on the announcement of the acquisition, it will remain an independent company headquartered in Stuttgart.” On the other hand, VW chief executive Martin Winterkorn also made a nice statement, “Porsche is a real enrichment for our company’s portfolio”.

According to Reuters report, VW Porsche merger entails a US$6.7 billion capital increase and this is financed by Porsche’s existing shareholders. The merger also make Porsche’s shares tumbled 15.2%

In 2008, VW had sold 6.27 million cars and Piëch has his sights set on overtaking Toyota, which sold 8.9 million cars. In November 2009, Piëch’s sight has become the truth and Volkswagen and Porsche overtook Toyota and become the world’s largest car manufacturing group in terms of production. See also Top 20 best selling cars in Germany.

The merger of the two companies has brought the holding company stronger. VW was founded in 1937 and today it has includes many famous car marques such as Audi, Bentley Motors, Bugatti Automobiles, Automobili Lamborghini, SEAT, Skoda Auto, and Scania (heavy goods vehicle manufacturer). On the other hand, Porsche is a German automotive manufacturer that famous in building luxury high performance sports cars and supercars for many years. Porsche is also founded in the 30’s by Ferdinand Porsche and it has more than million of fans in the world today.

Rumors around the world said that VW may run the whole show alone and this has become a big concern for Porsche enthusiasts as it may affect the future sales. However, we believe the merger of these two major cars companies will bring a lot more advantages than we can imagine as long as it handled nicely. If you look at the VW Bettle and Porsche, aren’t they looking a little similar? Let’s cheers for VW Porsche merger!
VW Porsche logo

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