VW hurries Porsche buyout

The world's largest car company, Volkswagen, will complete its takeover of Porsche on August 1. VW said in its notice to investors on Wednesday that this new completion date was "roughly two years earlier" than the Wolfsburg-based company previously expected.

VW already owned 49.9 percent of Porsche AG and the two companies were negotiating terms of a final takeover.

Volkswagen will acquire the remaining 50.1 percent for roughly 4.46 billion euros ($5.56 billion), to be paid to Porsche AG's holding company, Porsche SE. Porsche will also acquire a single voting share in VW in return.

The deal has been classified not as a purchase but as internal restructuring, making it tax-exempt under German law. That's the reason why one VW share had to be involved in this "exchange."

Role reversal

Roughly 2 billion euros from this fee will be used by Porsche to get rid of its outstanding debts.

The profitable sports car maker, driven primarily by its sports utility vehicle the Cayenne in recent years, had racked up massive debts a little over four years ago when it sought to buy out VW. The far smaller company was forced to abort this ambitious plan after racking up over 11.4 billion in debt. Suddenly Porsche's erstwhile takeover target VW became the company's only lifeline.

The transfer of the first half of Porsche shares was agreed as part of the VW rescue package, and was valued at 3.9 billion euros. The increased price for the second half is a result of Porsche's improving fortunes in the mean time.

The two companies have been closely interwoven for decades on some level.

The majority shareholders in Porsche until now, the Porsche and Piech families, are also influential members of the VW company - primary shareholder Ferdinand Karl Piech has been chairman of the VW board of directors since 2002.

msh/jm (AFP, dpa)