Porsche and VW edge closer to integration

Porsche and Volkswagen have released statements during the last 24 hours declaring their resolve to join forces.

The Piech and Porsche families hold interests in the two German companies and are agreed that both companies should be integrated as one automotive group -- comprising ten distinct brands working more or less independently of each other.

As the Carsales Network reported earlier this year (more here), the state of Lower Saxony owns a 20 per cent shareholding in Volkswagen and is potentially in a position to hinder the integration.

A recent ruling by the European Court of Justice has declared 'Volkswagen's Law' illegal. This law was enabled to deter foreign investors from taking over Volkswagen, but also prevents a takeover of VW by Porsche. In essence, the law restricted any shareholder to no more voting rights than entitled by a 20 per cent shareholding of Volkswagen -- even if the shareholder actually held a larger interest in the company.

In the Porsche release, the State of Lower Saxony was described as the "largest co-shareholder", but neither Porsche nor Volkswagen has openly expressed the view that the state government will block the 'integration'.

Both companies desire the final 'integrated' group to comprise ten distinct automotive marques operating with a degree of autonomy under the one umbrella -- not too different from what we have currently in Audi, Seat and Skoda reporting to Volkswagen but largely as masters of their own destiny.

Over the next four weeks, a joint working group will nut out a corporate structure for the amalgam of Porsche and Volkswagen -- plus VW's various subsidiaries. This working group will be peopled by representatives acting on behalf of Porsche, Volkswagen, the State of Lower Saxony and the employees of the two companies.

As more information comes to hand, we'll let you know.

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