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Volkswagen completes Porsche takeover

Volkswagen has completed its takeover of Porsche, acquiring the 50.1 percent of the luxury automaker that it didn't already own. Volkswagen will pay Porsche $5.6 billion plus one ordinary VW share, according to the agreement.

Fabian Bimmer/Reuters/File
Martin Winterkorn, CEO of German carmaker Volkswagen (R) and CEO of Porsche, Matthias Mueller (L) laugh before a news conference in Wolfsburg, July 5, 2012. Porsche SE, the holding company that still controls about half of the sports-car business that VW does not already own, will receive 4.46 billion euros ($5.58 billion) plus a single common VW share, in exchange for full control of Porsche, VW said in a statement late on Wednesday.

Porsche is now officially part of the Volkswagen Group, with the two companies announcing this week that Volkswagen will purchase the remaining 50.1-percent stake in the sports car manufacturer for 4.46 billion euros (approximately $5.6 billion) from its current holding company owner Porsche SE.
 This ends a seven-year-long takeover feud that saw Porsche previously attempt to take over Volkswagen and an ensuing embroilment of the ruling Porsche and Piech families.

 The latest move will allow the integrated automotive group consisting of Volkswagen and Porsche to become a reality two years earlier than the original Comprehensive Agreement signed in 2009, thanks to a separate agreement with German tax authorities.

 Under the new structure developed jointly by the two companies, Porsche SE will contribute its operations as a holding company, including its 50.1-percent Porsche stake, to Volkswagen, which already holds indirectly 49.9 percent of the sports car manufacturer.

 Once the transaction has closed, Volkswagen will hold 100 percent of the shares of Porsche via an intermediate holding company. In return, Porsche SE will receive the $5.6 billion consideration plus one ordinary share of Volkswagen. The cash consideration is based on the equity value of 3.88 billion euros ($4.85 billion) for the remaining shares of Porsche set out in the original Comprehensive Agreement, plus a number of adjustment items.

 Among other things, Porsche SE will be remunerated for dividend payments from its indirect stake in Porsche that it would have received as well as for half of the present value of the net synergies realizable as a result of the accelerated integration, which amount to a total of approximately 320 euros million ($400 million). If all goes to plan the move should be finalized by August 1.

 Speaking at the announcement this week, Volkswagen CEO Martin Winterkorn said, "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.”

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