Report: Volkswagen Begins Takeover Process With 49.9 Percent Stake in Porsche

Volkswagen has announced that as the result of recent talks in its “step towards an integrated automotive group with Porsche” (aka, takeover) it will begin by taking a significant 49.9 percent share in the German sports car maker. The process will begin this year with a final merger occurring in 2011.

Volkswagen is expected to pay 3.9 billion Euros ($5.8 Billion) for the almost 50 percent stake. Pending shareholder approval, Volkswagen will offer preferred stock next year to raise the necessary capital.

In a statement VW said that it, “remains committed to the phased integration of the two companies and is preserving the independence and the interests of Porsche.”

Official release after the jump:

Integrated automotive group: Volkswagen will take a 49.9 percent stake in Porsche AG in first step

Wolfsburg, 20 October 2009 – Volkswagen Aktiengesellschaft will take a 49.9 percent stake in Porsche AG in a first step towards an integrated automotive group with Porsche. This was agreed between Volkswagen and Porsche SE during negotiations on the contracts of implementation relating to the merger of the two companies. The Comprehensive Agreement announced in August referred to an initial participation in Porsche AG amounting to 42 percent. The timetable for the creation of the integrated automotive group remains unchanged: Volkswagen will acquire a participation in the operating business of Porsche by the end of 2009. The merger of Volkswagen AG and Porsche SE is still scheduled to take place during the course of 2011.

The adjustment of the envisaged initial participation reflects the successful progress of negotiations between Volkswagen and Porsche concerning the details of the merger which have been taking place since the Comprehensive Agreement was approved. These negotiations indicate that the projects identified for a closer cooperation have been making swifter progress than initially anticipated. This positive development for both companies, which is an expression of the compelling industrial logic behind the merger, is now to be underscored by a larger participation in Porsche AG. Volkswagen is thus securing a higher share of the increase in the value of Porsche expected from the joint projects at an early stage. At the same time, Volkswagen remains committed to the phased integration of the two companies and is preserving the independence and the interests of Porsche.

Based on the enterprise value calculated for Porsche AG, Volkswagen is expected to pay approximately EUR 3.9 billion for the participation in the company. An increase in Volkswagen’s preferred share capital is planned for the first half of 2010 in order to refinance the participation and maintain Volkswagen’s good credit rating. Shareholders will be requested to adopt a resolution authorizing such an increase at an Extraordinary General Meeting on December 3.