NEW YORK—German automaker Volkswagen AG has taken over the remaining 50.1 percent of sports car manufacturer Porsche in a deal valued at 4.5 billion euros ($5.6 billion).
Volkswagen’s courtship of Porsche lasted seven years, and the deal brings closure to a saga that had divided the prominent German families of Piech and Porsche.
The deal was consummated this week after agreement with German tax authorities that Volkswagen would not need to pay tax on a put-call option brought about by the current complex ownership structure.
“The unique Porsche brand will now become an integral part of the Volkswagen Group—that is good for Volkswagen, good for Porsche, and good for Germany as an industrial location,” Volkswagen CEO Dr. Martin Winterkorn said in a statement Wednesday.
“We can now cooperate even more closely and jointly leverage new growth opportunities in the high-margin premium segment through targeted investments in pioneering products and technologies,” Winterkorn said.
Wolfsburg, Germany-based Volkswagen, Europe’s biggest automaker, has more than 10 auto brands including the namesake VW, Audi, Bentley, Spanish automaker Seat, and motorcycle manufacturer Ducati. Volkswagen seeks to gain cost synergies in the merger with Porsche.
The takeover saga began when Porsche initially acquired a minority stake in Volkswagen in 2005, however, its subsequent attempt to acquire the remainder of Volkswagen backfired, and the deal collapsed. In the end, Winterkorn took over Porsche and Porsche agreed to sell a large stake of itself to the much larger Volkswagen. At the time in 2009, which was the middle of the financial crisis, Porsche had an onerously large debt burden.
“The accelerated implementation of the shared goal will make Porsche SE a financially strong holding company,” board member of Porsche’s holding firm, Matthias Mueller, said in a statement this week.
With Porsche, Volkswagen adds a well-known and well-respected marque to its brand stable. Porsche has consistently been one of the most profitable automakers, and its cars frequently top the list in terms of quality and reliability.
Porsche’s financials will be fully integrated into Volkswagen’s starting on Aug. 1, the companies said. However, despite its profitability, the earnings are expected to be offset by certain costs due to purchase price allocation.
Volkswagen, currently the world’s No. 3 automaker, has ambitious goals to surpass General Motors and Toyota to become the world’s biggest automaker. The company has a large market share in Europe and Asia, but has yet to crack the top seven in North America.
The unions of both companies also approved the deal. Volkswagen AG (ADR) shares rose $1.86, or 6.2 percent, Thursday on the news.