Merger muddle

In the latest twist in the Volkswagen-Porsche merger saga, VW chairman Ferdinand Piech failed to show up at a crucial meeting of Porsche's supervisory board on Monday. Reports say no explanation has been offered for his absence.

The Piechs and Porsches are heirs to two of Germany's oldest industrial families. Now, a power struggle over the shape of a new, post-merger auto giant is threatening to wreck a deal to amalgamate Europe's largest automaker with luxury sports car manufacturer Porsche.

Monday's meeting was called to address the integration plan, which was agreed upon earlier this month after a meeting of the Porsche family and top executives of the two companies in Salzburg, Austria.

However, that plan veered off course over the weekend when VW announced it was stalling negotiations pending "clarification'' from Porsche. The latter, however, insisted talks were still on track and that only a working group meeting between the two companies had been cancelled.

The Porsche parent group owns just over 50 percent of VW after boosting its stake earlier in the year. In fact, the company had aimed to raise its stake to 75 percent until it was hit by the global economic downturn.

Porsche is now weighed down by a nine-billion-euro ($12 billion) debt, which forced it to abandon ambitions for a complete takeover of the much larger VW.

Meanwhile, thousands of Porsche workers demonstrated on Monday outside the venue of the meeting in Weissach, a suburb of the southern city of Stuttgart, against VW's reported plans to turn Porsche into just another division of the auto giant. The chief labor representative urged the roughly 3,000 demonstrators to fight to retain Porsche's independence.

rb/dpa/AFP

Editor: Nancy Isenson