• May 18, 2009
According both automakers, the Porsche-Volkswagen merger has been stalled after VW's management determined Porsche "is lacking several fundamental conditions for the discussions." According to a VW spokesperson, the rift stems from Porsche's inability to demonstrate how the two companies would be integrated, but neither automaker has elaborated on why the talks have stopped. Informed speculation suggests that between management changes, structural considerations and Porsche's $12 billion in debt, VW is becoming weary of the merger. Although negotiations were supposed to continue today, according to sources inside VW, it's unclear when discussions will resume.

[Source: Reuters | Image Source: Nigel Treblin/Getty]


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  • 12 Comments
      • 5 Years Ago
      I'm just surprised that, VW being big enough to buy Porsche in a flash, they didn't already do it - or are they just waiting for Porsche to fail and then buy them at bargain price?
      • 5 Years Ago
      This soap is so full of huge German egos and family squabbling, its just amazing to watch. The way I understand this, Porsche started by playing VW shares in the stock market,made huge profits on paper, used those paper profits to finance more purchases with the end game of owning 75% of VW and paying off the debts using VW's cash.
      Well, Porsche didn't get to 75% before the financial meltdown, credit is now dried up and loans need repayment, so Porsche is stuck with somewhere more than 50% but less than 75% of VW, no real controlling rights and a debt estimated at about 9 billion euros (maybe more).
      Truly scary scenario, a sovereign fund could walk in and potentially own the world's 2nd largest carmaking group right now and Porsche would have handed it to them on a silver platter. Imagine Bugatti, Lambo, Bentley, Porsche, Audi, VW, Seat, Scania and a whole bunch of other brands becoming Chinese, its no wonder they weren't interested in Chrysler or GM, there is a much tastier prize becoming available.
      • 5 Years Ago
      Wow. I wasn't expecting a swift kick to the nuts to Porsche by Volkswagen. It's good for VW to push Porsche around, especially when they are so much in debt!
        • 5 Years Ago
        Everybody's debt....that has to be the single most important factor in many of the deals being inked today.

        It's hard for some of these automakers to secure loans or to refinance their existing debt. They're all betting that times will get better in 2-3 years and they'll be able to, easily, repay the loans. But the banks & financial institutions think otherwise, that they are taking on too much debt and can't possibly repay the astronomical amounts like the automakers claim.

        The banks don't want to extend loans to a hurting business just keep them going for a year or until they fill bankruptcy. The bank loses their return for the loan in that case takes a financial hit that they themselves probably can't afford.

        Porsche is acting like an uninformed US homeowner trying to buy a larger home across town. They know many people like their current home, but are now dismayed to find out that it isn't worth (financially) as much as their fans perceive. And they've also realized that its much harder to get a larger loan because their assets (current home) is not as isolated from the market crash and has suffered a major decrease in value. Regardless of history.
      • 5 Years Ago
      look at the orange peel on the sub-par paint job.
      • 5 Years Ago
      Wait, I thought Porsche was swimming in cash and that's why they were taking over VW? Now they are $12B in debt?
        • 5 Years Ago
        There was an article on forbes or WSJ about how Porsche turned into a sort of hedge fund with lots of leveraged assets and that the credit crunch might taken a toll on them... seems it is true.
        • 5 Years Ago
        Perhaps they bought all their shares of VW on a loan?

      • 5 Years Ago
      VW is "weary" of the merger? I think you mean wary.
      • 5 Years Ago
      That 12 Billion must be from the debt they acquired to purchase VW. They sell 100,000 units a year, and even if they were making a good margin on that volume I think it would be almost impossible to make enough to manage that debt.

      I imagine that Porsche needs VW to be profitable in order to take care of the debt and they want to get on the board so they can have a say in things.

      Could this be a case of the python swallowing the pig and then exploding?
      • 5 Years Ago
      Wait, I thought Porsche already gained the controlling share. Unless I don't remember right, but didn't the government already approve of Porsche taking over VW?
      • 5 Years Ago
      It's "wary." VW is becoming wary of the merger.

      "Weary" means tired.