VOLKSWAGEN AND PORSCHE FINALIZE CREATION OF INTEGRATED AUTOMOTIVE GROUP

Wolfsburg, Germany –  The creation of the Integrated Automotive Group between Volkswagen and Porsche was finalized on August 1 as planned. “The path is now finally clear for a bright future together. Even closer cooperation will enable us to significantly strengthen Volkswagen and Porsche, and further expand the Group’s product portfolio with fascinating new vehicles”, said Prof. Dr. Martin Winterkorn, Chairman of Volkswagen Aktiengesellschaft’s Board of Management, in Wolfsburg on Wednesday.

Under the structure developed jointly by Volkswagen Aktiengesellschaft and Porsche Automobil Holding SE (Porsche SE), Porsche SE contributed its indirect 50.1 percent holding in Porsche AG to Volkswagen Aktiengesellschaft effective August 1, 2012. Volkswagen thus holds 100 percent of the shares of Porsche AG via an intermediate holding company. The cash and share consideration of about €4.49 billion is based on the equity value of €3.88　billion for the remaining shares of Porsche　AG set out in the Comprehensive Agreement entered into in 2009, plus a number of adjustment items. Among other things, Porsche SE will be remunerated for dividend payments from its indirect stake in Porsche AG that it would have received, as well as for half of the present value of the net synergies realizable as a result of the accelerated integration, which amount to a total of approximately €320　million.

The accelerated integration of Porsche AG into the Volkswagen Group allows the implementation of Volkswagen　AG’s and Porsche　AG’s joint strategy more quickly. “The unique Porsche brand will continue to develop successfully under Volkswagen’s multibrand strategy and proven decentralized management structure. Porsche will retain its own identity and operational independence, just like all of the other Group brands”, said Winterkorn.

Volkswagen shares soar after automaker announces deal to complete takeover of Porsche

Shares in Volkswagen AG soared higher on Thursday after Europe’s biggest automaker announced a deal to complete the takeover of sports car manufacturer Porsche by the end of the month, which the company said will result in savings of some €700 million ($880 million) per year.

Volkswagen’s shares were up 5.9 per cent at €135.75 in Frankfurt trading. The Wolfsburg-based company announced Wednesday night that Porsche will become a fully integrated brand as of Aug. 1 — joining others such as Audi, Volkswagen, Seat, Bugatti, Lamborghini and Bentley.

Volkswagen is to acquire the 50.1 per cent in Porsche’s capital that it doesn’t already hold from holding company Porsche SE for €4.46 billion plus one Volkswagen share. The arrangement allows it to book the acquisition as an internal reorganization, which is advantageous in tax terms.

Porsche failed in an attempt to take over the much larger VW in 2009 — loading itself with debt just as the global economy was entering its deepest recession since World War II following the 2008 financial crisis. Volkswagen emerged on top but the companies’ integration had been held up lately by legal issues.

“We will concentrate all our strength on the operative business and the solid, profitable growth of the company,” Volkswagen CEO Martin Winterkorn said Thursday, adding that the deal allows the companies to benefit “earlier than planned from the long-term synergies of about €700 million per year.”

The chief financial officer, Hans-Dieter Poetsch, said everyone would benefit from the deal because the savings it will produce “will lead to rising profit and so to rising tax payments.”

Volkswagen said that integrating Porsche’s highly profitable car business would have a positive impact on its earnings — but for this year, charges will largely offset that impact on operating profit.