Volkswagen to buy rest of Porsche

Volkswagen has announced it will assume full control of Porsche two years earlier than expected in August, saving an estimated €320 million ($A390m) in “net synergies” to be shared evenly between the two companies.

Europe’s biggest car-maker, which plans to be the world’s largest by 2018, has announced it will purchase the 50.1 per stake in the Porsche SE automotive business that it doesn't already own for €4.46 billion ($A5.45b).

The price is based on an equity value of €3.88 billion ($A4.7b) and also includes what the Porsche holding company would have received in dividend payments and half of the forecast savings from the transaction, which allows VW to purchase Porsche's automotive business without having to pay the taxes associated with exercising a putand--call option.

The move will see the famed Zuffenhausen sportscar maker become one of Volkswagen’s many vehicle brands two years earlier than would have been “economically feasible” under a put-and-call option as part of a deal announced in 2009, after Porsche notched up more than €10 billion ($A12.2b) of debt in an unsuccessful attempt to take over Volkswagen.

The German companies abandoned the plan for with the Porsche holding company, which owns 50.7 percent of VW's common stock, because of lawsuits against Porsche in the US and Germany, but VW was able to proceed with the transaction after reaching an agreement with German tax authorities.

"Good for Volkswagen, good for Porsche and good for Germany as an industrial location," said Volkswagen CEO Martin Winterkorn.

“We can now cooperate even more closely and jointly leverage new growth opportunities in the high-margin premium segment.

“Combining their operating business will make Volkswagen and Porsche even stronger -- both financially and strategically -- going forward.”

Read the latest news and reviews on your mobile, iPhone or PDA at carsales' mobile site…