Volkswagen and Porsche say no merger in 2011

September 09, 2011 | 10:58

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A merger of German automakers Porsche and Volkswagen will not be completed in 2011 as planned, but the two companies said Thursday they still intend to create a tie-up.

The boards of the two companies concluded the merger "cannot be implemented within the time frame provided" due to legal proceedings against Porsche in Germany and the United States for alleged market manipulation, Volkswagen said in a statement.

"Nevertheless, all parties remain committed to the goal of creating an integrated automotive group with Porsche and are convinced that this will take place," it added.

Luxury sports car firm Porsche stunned the auto manufacturing world in October 2008 when it announced that it had acquired 75 per cent of Volkswagen.

But the takeover move backfired against the backdrop of the financial crisis as Porsche racked up a nine-billion-euro debt in acquiring a controlling stake in Europe's largest carmaker, and it was Volkswagen that saved the sports car company.

However their merger plans have been frustrated by lawsuits by investors against the maker of 911 sports cars for allegedly causing them to suffer several billion dollars in losses as a result of misleading comments on Porsche's intentions to take over VW.

Volkswagen said the legal proceedings "mean that it is currently impossible to quantify the economic risks of a merger and therefore to perform the valuation of Porsche SE required to determine the exchange ratio."

AFP

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