The much-anticipated merger of Volkswagen and Porsche could very well be out the window, due to tax and legal issues surrounding the transaction. The chances of a merger happening at this point are slim – about 30% according to VW CEO Martin Winterkorn. Volkswagen retains a put-call option, which allows it to acquire the remaining 50.1% of Porsche SE’s sports car holdings for a price of 3.9 billion euros ($5.41 billion) independent of any merger, but such a move could have serious tax implications if exercised before 2014.
Porsche management had launched a risky takeover of Volkswagen, but that fell apart when Porsche could no longer support the VW derivative positions that it used to build its stake in the company. The two companies have a merger contract which expires at the end of next year.
Porsche was forced into selling off its sports car business to VW in stages, and offloaded its call options on VW stock to Qatar for a heavy loss back in 2009.
– By: Stephen Calogera
Source: Automotive News