Volkswagen, Porsche logos

After several snags, fits, stops and starts, and even a temporary fear by executives the deal might not get done, German automaker Volkswagen is all set to close the deal to acquire Porsche.

On one hand, the deal may sound incongruous to the average consumer and car buyer. VW, which literally translates to "the people's car," buying one of the most prestigious and exclusive brands in the world. But, in reality, the managements and ownership of the two companies have been entwined for decades since the end of World War Two.

Perhaps one of the most ironic twists in the deal that will finally bring Porsche under the Volkswagen AG umbrella, is that it comes after the much smaller Porsche had tried in 2008 and 2009 to acquire the much larger Volkswagen. Porsche's former CEO, Wendelin Wiedeking, considered almost the Lee Iacocca of the European auto industry, tried to engineer the deal through a complex and shady web of financial maneuvers and investments that came completely unglued and almost bankrupted Porsche.

The failure of the deal completely ruined what had been an 18-year, storied career for Wiedeking.

Indeed, after Porsche attempted the hostile takeover of VW, it was Volkswagen that came to Porsche's rescue. The deal has been delayed while the companies and the lawyers have been trying to sort out who will be on the hook for a number of shareholder lawsuits should they get decided in the favor of the plaintiffs.

The deal that is being solidified today, which will result in VW's full ownership of Porsche on August 1, was actually begun in 2009.

The connections between VW and Porsche have been many.

The connections between VW and Porsche have been many. Let's start with the fact that VW supervisory board chairman Ferdinand Piech is also part of the Porsche-Piech clan that holds a controlling stake in Porsche AG. The two companies have done business and collaborated on vehicles for decades. The current Volkswagen Touareg and Porsche Cayenne, for example, were engineered by Porsche and share a chassis. Going back in even further, of course, Ferdinand Porsche designed the original Volkswagen Beetle for the Nazi Party in 1930s Germany – the car on which the present day Volkswagen AG was literally built after the war.

How will the deal work and what does it mean? Because Volkswagen already owns part of Porsche, the deal will be classified as a restructuring to avoid 1.5 billion euros in taxes that usually follow a merger or acquisition. It's good to have the clout of Piech and Porsche in German politics. After all, we are pretty sure Germany could use the money, what with the country bailing out Greece and all.

VW will pay Porsche shareholders $5.61 billion for the 50.1 percent it does not already own.

VW will pay Porsche shareholders $5.61 billion for the 50.1 percent it does not already own. Then companies will continue to build cars together, finding engineering efficiencies like the one created around the Cayenne and Touareg.

And it's not as if VW doesn't know how to manage luxury brands. It also owns Bentley, Audi, Lamborghini and Bugatti. Indeed, Porsche's influence will be seen in future Bentleys and Audis for sure, though the brands will remain fiercely independent.

The deal is seen as a big positive for both companies by investors, who drove VW and Porsche shares higher on Thursday.