€4.46bn in cash – plus one VW share – seals tax-free takeover of Porsche

By GARETH MACKIE
Published on 06/07/2012 00:00

GERMAN car giant Volkswagen has agreed to complete its takeover of Porsche in a deal that could save it from a tax bill of as much as €1.5 billion (£1.2bn).

VW is set to pay €4.46bn plus one share to Porsche Automobil Holding SE for the 50.1 per cent of the sports car business that it does not already own.

Submitting a single common VW share to Porsche may classify the deal as a restructuring under Germany’s so-called reorganisation tax law, enabling the transaction to be completed without triggering a huge tax bill that would have been incurred if the purchase had been sealed before August 2014.

Martin Winterkorn, chief executive of VW, said the deal was “good for Volkswagen, good for Porsche and good for Germany as an industrial location”. He added: “Combining their operating business will make Volkswagen and Porsche even stronger – both financially and strategically.”

The deal is expected to result in savings of about €700 million a year, which Porsche chief financial officer Hans-Dieter Pötsch said “will lead to rising profit and so to rising tax payments”.

Porsche will become a fully integrated brand within the VW group on 1 August, joining other marques such as Audi, Bentley, Bugatti, Lamborghini and Seat.

The two companies first agreed a merger in August 2009 after the maker of the iconic 911 sports car racked up more than €10bn of debt attempting to buy VW, pitting the Porsche family against the rival Piëch dynasty.

Credit Suisse analyst David Arnold said the deal would inflict no taxes on VW and cost the Wolfsburg-based company about half as much as a full-blown merger, which he estimated could have cost more than €8bn.