Porsche Merger Has VW Commitment Despite “Hurdles”

“VW Will Not Turn It’s Back…”

WOLFSBURG (Reuters) – Volkswagen AG warned that tax and legal hurdles posed a sizeable obstacle to a merger deal with Porsche Automobile Holding SE but said it would not turn its back on its indebted ally.

VW wants to overtake Toyota Motor Corp. as the world’s largest carmaker with 10 million vehicle sales annually by 2018 through a mixture of aggressive acquisitions, emerging market growth and streamlined production costs.

Getting full control over the lucrative Porsche AG sports car business and its industry-leading margins is a key element of VW’s strategy.

“Volkswagen remains totally committed to the Comprehensive Agreement and to the merger with Porsche,” CEO Martin Winterkorn said on Thursday at VW’s headquarters in Wolfsburg.

“However, the tax and legal hurdles still to be overcome on the way are not insubstantial,” he said.

Winterkorn, who also serves as CEO of Porsche SE, said preparations for the holding company’s planned 5 billion euro ($6.9 billion) capital increase in the first half of this year were “fully on schedule.”

Porsche SE’s only assets are its majority voting stakes in Porsche AG and Volkswagen, but it is lumbering under heavy debt and needs an infusion of fresh equity before being folded into Volkswagen.

Whatever happens, Winterkorn said VW had already developed concrete projects for over 60 percent of the joint 700 million euros ($971.1 million) in annual planned synergies with Porsche SE’s sports car making unit, Porsche AG.