The industry’s most important merger is finally getting underway as Volkswagen confirms full takeover of Porsche’s automotive business for around EUR4.46 billion plus one Volkswagen ordinary share. The schematic overview above tries to simplify how the merger will affect both parties. What it means is VW buys the 50.1 percent of Porsche AG it does not own yet, and Porsche becomes an integral part of the Volkswagen Group.
The first agreement for the merger was first signed back in 2009, but it proved harder that first anticipated, and both companies announced it would be impossible to arrive at an agreement until at least 2014. But something must have occurred behind the scene that allowed to go ahead with plans and make the deal happen two years early.
Porsche auto business is hugely profitable and by fully owning it VW expands its empire even further. What it means to the customers in terms of new models, probably nothing. Porsche will continue its operations as usual. Only now VW will be taking the money!
The accelerated integration model that has now been agreed is based on the Umwandlungssteuergesetz (Reorganization Tax Act) and the Umwandlungssteuererlass (Taxation of Reorganizations Circular) which was published at the end of 2011, as well as advance rulings from the relevant tax authorities, and can be implemented on economically feasible terms. Under the structure developed jointly by the two companies, Porsche SE will contribute its operations as a holding company, including its 50.1 percent Porsche stake, to Volkswagen Aktiengesellschaft, which already holds indirectly 49.9 percent of Porsche AG. Once the transaction has closed, Volkswagen will hold 100 percent of the shares of Porsche AG via an intermediate holding company. In return, Porsche SE will receive a consideration totaling around EUR4.46 billion plus one ordinary share of Volkswagen. The cash consideration is based on the equity value of EUR3.88 billion for the remaining shares of Porsche AG set out in the Comprehensive Agreement, 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 EUR320 million.